Miller Magazine Issue: 148 April 2022

94 ARTICLE MILLER / APRIL 2022 Big wheat trouble in big China The Chinese ag minister has declared that the winter wheat crop will be the worst in history. >90% of the Chinese wheat crop is winter planted. China is a huge producer of grain but requires a large import program. Australia no longer sends barley, but we send wheat to China. China has huge stockpiles (on paper) but has increased the import volumes during the past two years. 2022 will test whether those stocks are as large as government sources suggest. This development will likely see imports remain strong. Andrew Whitelaw Manager Thomas Elder Markets Melbourne There are years where little happens; then there is 2022. Ukraine, drought creeping through the US, and now China is seemingly stuffed. China is often quite reserved when it comes to reporting on its crops. A record crop in China is a bit of an in-joke within the industry. Last month, the Chinese Ag min- ister commented that the winter wheat crop could be the worst in history. The Chinese government generally promotes a rosy view on domestic food production. When the Chinese government say that conditions are bad, it’s something to take seriously. So I thought it was worthwhile diving into the situ- ation and some of the data around China and grains. Whilst we tend to think of China largely in space as a large buyer, they are a very large producer of grains. The chart below shows the extent of their produc- tion. During the past five years, China has produced on average 18% of the global wheat crop or 134mmt (5.5x our average production). The majority of the Chinese wheat crop is winter planted (>90%). Therefore a disaster in the winter wheat crop bodes very poorly for overall production. Through our contacts, it is expected that acreage will be substantially down. The lateness of planting is likely to result in yield reductions. This could lead to a substantial downgrade and a move from the ‘re- cord’ levels that we typically hear.