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China's Wheat Output to Drop Amid Drought, But Situation Eases with Rainfall and Irrigation

Strategic Insights

— 2 min read

China is expected to see a significant drop in wheat output this year due to the ongoing drought in key producing regions, but scattered rainfall and some irrigation may help contain the damage. The severity of the drought has led to 5.9 million hectares of wheat areas being affected, although this number has decreased by 392,000 hectares from the previous day. Meanwhile, China's poultry and hog raisers plan to purchase 62,500 metric tons of corn from Thailand to alleviate tight supply.

Key Takeaways:

  • China's wheat output is expected to drop due to the ongoing drought in key producing regions, with the Office of State Flood Control and Drought Relief Headquarters stating that 5.9 million hectares of wheat areas are affected.
  • Scattered rainfall and some irrigation may help contain the damage, with the Office of State Flood Control and Drought Relief Headquarters reporting a decrease of 392,000 hectares in affected wheat areas from the previous day.
  • Despite market rumors that China may buy 10 million metric tons of corn from producing areas in the east, analysts believe rising corn prices will reduce the likelihood of this plan being implemented.
  • Philippine feedmillers, poultry raisers, and hog raisers plan to buy 62,500 metric tons of corn from Thailand to alleviate tight supply.
  • Chicago Board of Trade corn futures ended slightly lower on technical selling ahead of the long holiday weekend.
  • Chicago Board of Trade soybean futures settled lower, continuing the week's downward spiral, due to bearish weather outlooks for Argentina crops.
  • U.S. wheat prices wrapped up a bearish week with additional losses, driven by the direction dictated by neighboring markets.
  • The value of grain in most U.S. farm bins depreciated by 2-4% this week, despite a firm basis market.

Statistics:

  • 5.9 million hectares: The total wheat areas affected by the drought in China, as stated by the Office of State Flood Control and Drought Relief Headquarters.
  • 392,000 hectares: The decrease in affected wheat areas from the previous day, as stated by the Office of State Flood Control and Drought Relief Headquarters.
  • 62,500 metric tons: The amount of corn planned to be purchased by Philippine feedmillers, poultry raisers, and hog raisers from Thailand.
  • 10 million metric tons: The rumored amount of corn China may buy from producing areas in the east, although analysts believe this is unlikely due to rising corn prices.
  • 2-4%: The depreciation in the value of grain in most U.S. farm bins this week, despite a firm basis market.

Sources:

  • Dow Jones Commodities News via Comtex
  • Office of State Flood Control and Drought Relief Headquarters
  • Dow Jones Newswires
  • National Food Authority
  • Chicago Board of Trade

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