There are a few market wires kicking around this morning suggesting Chinese wheat production could drop by as much as 20% this year. A combination of drought conditions across Shandong and Hubei and then rain at harvest across Henan and Anhui provinces has resulted in a sharp jump in quality wheat prices at a local level there.
Last year China produced around 130mt of wheat, recent gov production estimates there have the current crop pegged at about 127mt, a 20% reduction would see wheat production closer to 104mt.
The important numbers seem to be getting overlooked, as usual, China comes into 2018 with carry over stocks of roughly 126mt according to the USDA (who really knows ?). So even with a crop of 100mt all we are likely to see is a draw down of what can only be called a massive stock pile of wheat. As with the recent corn draw down in China any draw down is a good reduction but as for it resulting in a massive jump in world wheat values, that is probably not likely. If China does import wheat, the impact it will have on the market will depend a lot of the volume of purchases and the quality they go in search of. I’m sceptical as always but it is definitely worth keeping an eye on.
The US futures markets were generally weaker for wheat and firmer for soybeans. I guess beans could only go south for so long. End of month volume is low. Maybe people in the US are more interested in summer break than markets at present.