Miller Magazine Issue: 152 August 2022

94 COUNTRY PROFILE MILLER / AUGUST 2022 The concept of grain security in China has shifted from "feeding people" to "feeding peo- ple and livestock/poultry when needed" over the past two years. But skyrocketing wheat prices have prevented feed mills from replacing corn with wheat this year. Chinese wheat prices soared 15 percent in the first half of 2022. Industry sources believe the rising prices were attributed to international fac- tors such as the Ukraine war and the COVID pan- demic. At home, planting costs increased signifi- cantly, and farmers are reluctant to sell because of continuing price increases. At the same time, wheat end users have concerns over the future wheat supply and want to build stocks, causing speculation in the market. While large flour mills are struggling to maintain their dominant market positions, all flour mills face higher costs, poor sales, overcapacity, and industry consolidation. On April 13, China suspended wheat auctions one month earlier than last year. The Minimum Support Program (MSP) was not launched last year and is not expected to be launched this year. Last year saw more than 27 million tons of MSP wheat sold from January until sales were halted before the new harvest in mid-May. But this year, the country released only around 500,000 tons of wheat from the reserves in weekly auctions, compared with 4 million tons per week offered in 2021. Industry sources believe MSP stocks are no longer plentiful and demand is not as strong. WHEAT IMPORTS MY2022/23 wheat imports are forecast at 9 mmt, 500,000 tons lower than USDA's June es- timates due to high prices. International wheat prices have soared by over 40 percent in the past four months. Because of the COVID pan- demic, the war in Ukraine, export bans, higher freight and insurance costs, inflation, and spec- ulation, international wheat prices are expected to remain high. In the first five months of 2022, wheat imports were down by 4.1 percent year- over-year. Imported prices of wheat landed in May were lower than domestic corn prices. But most of the imported wheat is destined for flour production, and only a small percentage goes to feed mills. MY2022/23 ending stocks are forecast at 145.8 mmt. “The industry believes China only has about 40 MMT MSP wheat reserves, but overall, government reserves held by various entities are sufficient,” USDA said.