Ice age warning sign: China’s wheat crop destroyed….Asian giant must import grain

By on July 19, 2013
A farmer piles wheat up after a harvest in Zouping county

China’s wheat crop has suffered more severely than previously thought from frost in the growing period and rain during the harvest, and import demand to compensate for the damage could see the country eclipse Egypt as the world’s top buyer.

Interviews with farmers and new estimates from analysts have revealed weather damage in China’s northern grain belt could have made as much as 20 million tonnes of the wheat crop, or 16 percent, unfit for human consumption. That would be double the volume previously reported as damaged.

Higher imports, which have already been revised upwards on initial damage reports, will further shrink global supplies and support prices, fuelling new worries over global food security.

The U.S. Department of Agriculture on Thursday raised its forecast for China’s imports in 2013/14 to 8.5 million tonnes from 3.2 million tonnes in the previous year, prompting U.S. wheat prices to rally to more than two-week highs.

But overseas traders and analysts estimate imports could rise above 10 million tonnes, surpassing the 9 million tonnes the world’s biggest buyer Egypt is expected to buy.

Competition from China for more imports would force other buyers, such as Egypt, to pay more for grains, in a new blow for the Middle East country after two years of political turmoil has left it struggling for funds to pay for food imports.

In China’s top wheat producing province of Henan, farmers visited by Reuters said kernels shrunk because of the frost early this year followed by more damage with grains germinating due to the rainstorms in May. Henan is in the northern grain belt, which accounts for about half of China’s output.

“The kernels this year are half their normal sizes,” said Feng Ling, a 55-year old farmer in Xuchang, central Henan, where some growers have seen their production slashed by 40 percent from year ago. “The harvest was terrible.”

China has already booked around 3 million tonnes of wheat for shipment in the year to June 2014, nearing last year’s purchases.

That would be the biggest volume imported since the near 10 million tonnes China booked in 2003/2004 after a sharp decrease in the domestic harvest. In a normal year, China accounts for about a fifth of global wheat production and consumption.

“We expect between 15 to 20 million tonnes of wheat will be downgraded to use for animal feed, which will reduce wheat supply for milling purpose,” said Li Qiang, chief analyst at agricultural consultancy, the Shanghai JC Intelligence.

The crop damage across large swathes of China’s farmland is adding to concerns over global food supplies after unfavorable weather in top wheat exporters the United States and the Black Sea region resulted in quality downgrades.

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