Special analyst Zhang Rongsheng
The author believes that the wheat market is still in a pattern of strong supply and weak demand, although the wheat inventory of milling enterprises is not high, but the downstream market demand is sluggish, the policy auction continues, and the new wheat harvest is expected to be strong, the market bearish atmosphere is heavier, and the momentum of wheat prices is insufficient, but the magnitude of the decline again will not be very large.
History is always strikingly similar. In mid-to-late April, the wheat market changed its previous weak and volatile pattern, highlighting a large-scale rapid decline, and the frequency and magnitude of the decline were very amazing. The center of gravity of wheat prices in the main producing areas fell to about 1.30 yuan/catty, the reserve wheat was sold in a large area, and the pre-purchase price of new wheat continued to fall, and panic once again permeated the market. Monitoring shows that the current price of the national standard second-class new Pumai in the main producing areas is 2580~2640 yuan/ton, and it generally falls by 80~100 yuan/ton in a week.
The momentum of wheat price rise weakened before the new wheat was listed
According to the market, wheat prices had a brief rebound in early April, but under the double squeeze of weak milling demand and continuous policy wheat delivery, the rise and stabilization did not last long, and the market came to a "sharp turn", turned down again, and continued to fall to a new low since 2024.
At present, the price of Xinpumai net grain in Xingtai Milling Enterprise in Hebei Province is 1.295~1.305 yuan/jin, Shandong Heze is 1.28~1.325 yuan/jin, Henan Xinxiang is 1.275~1.32 yuan/jin, Jiangsu Xuzhou is 1.30~1.325 yuan/jin, Anhui Bozhou is 1.31~1.325 yuan/jin, down 0.025~0.05 yuan/jin week-on-week.
The price of high-quality wheat followed the decline of the general wheat. At present, the purchase price of "Gaoyou 2018" in Hebei is 3,000 yuan/ton, down 90 yuan/ton week-on-week, the purchase price of "Zhengmai 366" in Henan is 3,030 yuan/ton, and the purchase price of "Jinan 17" in Shandong is 2,840 yuan/ton, down 100 yuan/ton week-on-week.
New wheat is about to go on the market, but the wheat market has once again seen a sharp decline. The reasons are: first, the new wheat is approaching, the market sentiment is pessimistic, some inventory traders stop losses at high prices, increase shipments, and at the same time, reserves at all levels continue to rotate out, and the supply pressure of wheat market stage is greater; Bran sales are not smooth, prices continue to fall, flour enterprises reduce the start-up load, and some small and medium-sized enterprises choose to stop production and harvest, resulting in the overall demand for wheat market is more sluggish;
Market participants believe that the market can be said to be expected that the rising momentum of wheat prices before the listing of new wheat will weaken, however, the ferocity of this round of decline has greatly exceeded market expectations. From a rational point of view, although the bearish expectations of the wheat market before the new era are still the mainstream, the room for the price of old wheat to decline again is relatively limited.
The number of reserves has been reduced, and the reserve price has been lowered
According to the market, the number of wheat reserves at all levels has been reduced recently, and the auction reserve price has also been lowered, but due to poor consumer demand, pessimistic market sentiment, and the procurement enthusiasm of milling enterprises is not high, the transaction situation of reserve wheat is still light, not only the transaction price continues to fall, but also the phenomenon of large-scale unsold is also frequent. According to preliminary statistics, last week (April 22-26), a total of 503,000 tons of wheat from the central reserve were put up for auction and sold, and 134,000 tons were traded, with a turnover rate of 27%, the lowest turnover rate this year.
On April 22, China Grain Reserves Shandong Branch sold 43,500 tons of wheat from 2020 to 2023 at auction, and 6,052 tons were traded in Dezhou Warehouse, with a turnover rate of 13.91% and an average transaction price of 2,640 yuan/ton, down 39 yuan/ton week-on-week. On April 23, China Grain Storage Anhui Branch sold 18,702 tons of wheat from 2019 to 2023 at a reserve price of 2,600 yuan/ton, all of which were unsold. On April 24, China Grain Reserves Xi'an Branch sold 14,463 tons of wheat in 2021 at a bidding price, with a reserve price of 2,720 yuan/ton, all of which were unsold. On April 25, China Grain Reserves Henan Branch sold 29,678 tons of wheat in 2020 and 2021 at a competitive price, with a floor price of 13,120 tons, a turnover rate of 44%, a floor price of 2,600~2,640 yuan/ton, and an average transaction price of 2,615 yuan/ton, down 31 yuan/ton from the 22nd. On April 26, China Grain Reserves Beijing Branch sold 13,950 tons of wheat from 2018 to 2021 at a bid price, with a floor price of 2,630~2,680 yuan/ton, all of which were unsold.
In addition, the auction sales rate of temporary storage wheat has also dropped sharply. On April 24, Xinjiang put 20,623 tons of first- to fourth-class temporary storage wheat from 2015 to 2017, and only the floor price was 2,530 yuan/ton, and 580 tons of first-class wheat in 2017 were traded, with a turnover rate of 2.81%, down 88 percentage points from last week's turnover rate.
The off-season characteristics of flour sales are becoming more and more obvious
As the temperature continues to rise, the downstream market demand is weakening, the off-season characteristics of flour sales are more obvious, many companies have reported that despite the overall decline in flour quotations, dealers are still very cautious about taking goods, basically replenishing goods on demand, and channel inventory is low year-on-year. At present, the ex-factory price of special flour of milling enterprises in the main producing areas is 3060~3120 yuan/ton, down 80~100 yuan/ton week-on-week.
At the same time, the demand for downstream breeding is not strong, the demand for bran procurement of feed enterprises has decreased, coupled with the decline in the market trend of soybean meal, it is difficult to sell bran and the price has fallen. At present, the ex-factory price of bran of milling enterprises in the main producing areas is 1330~1390 yuan/ton, down 60~80 yuan/ton week-on-week.
According to the market, the current demand is in the off-season, flour, bran consumption continues to be weak, and the price has fallen one after another, the loss pressure of flour mills is greater, more to maintain a low operating rate, some even choose to shut down to avoid risks, the purchase of wheat is basically based on the use of picking, the desire to increase raw material inventory is not high.
Recently, the price of corn in North China has continued to decline weakly, but compared with the decline in wheat, it can be described as "a small thing". Due to the large decline in wheat prices, the price gap between wheat and corn has narrowed recently. At present, the price difference between wheat and corn in North China is about 300 yuan/ton, and wheat still has no substitution advantage in feed. Judging from the current wheat market, milling enterprises are still the main grain users, and they enjoy more right to speak in the buyer's market.
New wheat prices are expected to decline further
According to the market, due to the recent sharp decline in wheat prices and the strong bearish atmosphere in the market outlook, policy reserves at all levels of wheat at all levels have lowered the sales floor price of old wheat, and the transaction prices of new wheat harvesting and two-way procurement in 2024 have declined to varying degrees. Statistics show that local reserves in Shandong Province have pre-purchased 78,400 tons of wheat in 2024 in April, with an average transaction price of 2,658.97 yuan/ton, down 34 yuan/ton from the average transaction price of 2,692.62 yuan/ton in March.
On April 24, China Grain Storage Lanzhou Branch bid for the purchase of 19,099 tons of wheat in 2024, and all of them were sold. Among them, the floor price of Pingliang warehouse is 2760 yuan/ton, the transaction price is 2745~2750 yuan/ton, and the average transaction price is 2747.5 yuan/ton, down 10 yuan/ton from April 7, and the floor price of Ping'an warehouse is 2840 yuan/ton, and the transaction price is 2795 yuan/ton, down 58 yuan/ton from April 7.
On April 25, Shandong Laiyang Grain and Material Reserve Co., Ltd. purchased 600 tons of non-rain non-dried wheat in 2024, all of which were traded, with a floor price of 2,630 yuan/ton and a transaction price of 2,600 yuan/ton, down 40 yuan/ton from last week's transaction price and 70 yuan/ton from the same period in March.
On April 26, Hebei Bailiang Grain Reserve Group Co., Ltd. purchased 9,455 tons of new hard white wheat with a production of more than second class (including second class) in 2024, all of which were traded, with a floor price of 2,660 yuan/ton, a transaction price of 2,590~2,595 yuan/ton, and an average transaction price of 2,591 yuan/ton, down 47 yuan/ton from the average transaction price on April 19.
It is understood that with the continuous weakening of wheat market prices, the price of new wheat is expected to be further reduced. Previously, the market generally recognized the range of 2600~2700 yuan/ton for new wheat in 2024, which was later lowered to 2500~2600 yuan/ton, and even fell to 2400~2500 yuan/ton.
The room for further decline in the price of aged wheat is relatively limited
According to authoritative estimates, the mainland's grain stocks are abundant, and wheat stocks can meet the consumption demand for one and a half years, so the relevant departments have a lot of room for regulation and control to maintain the stable operation of wheat prices, and it is recommended that market players rationally purchase and sell.
There are still more than a month before the centralized listing of new wheat, and there is only half a month left for the listing of early maturing wheat in Hubei, and the weather still has an uncertain impact on new wheat, and the market still needs to pay attention to the impact of weather on the production of new wheat.
From the perspective of the wheat market before the new market, the market pattern of sufficient supply and weak demand will not change, and the market situation of weak and volatile wheat prices will continue, and the market may gradually enter a cycle of new and old merger. However, considering that the surplus grain at the grassroots level has bottomed out and the channel inventory is gradually depleted, even if the new wheat is still needed to be matched after it is concentrated on the market, the room for the price of old wheat to fall again is relatively limited, and the market should not be overly pessimistic.
Recently, market feedback shows that after a wave of stormy downfall, the price decline momentum has gradually slowed down in recent days, and the number of enterprises that have reduced prices has decreased, and the current purchase price of flour mills is basically around 1.30 yuan / catty, and the market has initially shown a weak and stable situation. (This article was originally published in the A03 edition of the Grain and Oil Market News on April 30, 2024)