China's Wheat Industry in 2015: Local Prices Fluctuate Slightly
Since entering mid-November, domestic wheat market purchases and sales have remained sluggish, wheat prices have been generally stable, with local prices fluctuating slightly. The state temporary storage wheat auctions proceeded as usual, with all lots failing to sell for the first time. In the international market, the USDA November supply and demand report was clearly bearish, and nearby CBOT wheat posted its largest weekly decline since July. According to monitoring by the center, as of November 12, the average trading price of third-grade white wheat in major grain and oil wholesale markets nationwide was 2,228 yuan/ton, down 12 yuan/ton week-on-week; down 290 yuan/ton from the same period in 2014, a year-on-year decline of 11.52%. The 43rd issue of the 2015 Sinograin national wheat purchase price index was 137.71, down 0.11% week-on-week.
After a month of repair, wheat market prices have basically tended toward stability. Since bullish and bearish factors in the market are both not obvious, market sentiment is relatively calm, and short-term wheat prices are expected to remain mainly stable.
The wheat market is generally stable, with local prices fluctuating slightly
Normally, wheat flour consumption in the fourth quarter should gradually recover, but due to insufficient demand in the terminal market, the wheat market at this time in 2015 appeared sluggish in purchases and sales. Although wheat prices in a few areas that had previously fallen excessively rose slightly in a restorative manner, overall current wheat prices remain below the national minimum purchase price level.
On November 13, the factory-gate price of ordinary wheat in Shijiazhuang, Hebei, was 2,340 yuan/ton, and in Suzhou, Anhui, it was 2,320 yuan/ton, up 20 yuan/ton from the same period last week. The factory-gate price of ordinary wheat in Jinan, Shandong, was 2,340 yuan/ton, in Zhengzhou, Henan, it was 2,340 yuan/ton, and in Xuzhou, Jiangsu, it was 2,300 yuan/ton, basically stable.
The recent slight upward movement of some wheat prices in major producing areas was mainly due to a reduction in market-circulating grain sources, combined with recent nationwide temperature drops and rain and snow weather, which affected traders' normal grain sales, rather than an increase in market demand recovery.
Purchasing of domestic wheat in southern sales areas changed little, with purchases and sales continuing a light trend, but affected by slight price increases in some areas of major producing regions, wheat arrival prices in sales areas showed slight fluctuations. On November 13, the arrival price of medium white wheat and red wheat in Huangpu, Guangzhou, was 2,520 yuan/ton, unchanged from last week; in Fuzhou, Fujian, the arrival price of medium white wheat and red wheat was 2,520 yuan/ton, up 10 yuan/ton from the same period last week.
According to a wheat industry market survey and analysis report, supported by the launch of state temporary storage corn purchases and affected by the recent sharp rise in corn prices in North China, the wheat-corn price spread has narrowed compared with earlier. Currently, the wheat-corn price ratio in Shandong is 1.23, with a price spread of 436 yuan/ton; in Guangdong and Fujian it is 1.2, with a price spread of 423 yuan/ton; in Hebei it is 1.29, with a price spread of 527 yuan/ton; and in Henan it is 1.26, with a price spread of 481 yuan/ton. Although the wheat-corn price spread has narrowed recently, based on the current ratio, it is still difficult for wheat to enter feed substitution.
⟦NL> Flour prices are generally stable, bran prices are running weak
Due to poor consumption of downstream finished products, flour milling enterprises have maintained low operating rates since entering November. According to monitoring, the average operating rate of flour processing enterprises is currently 50%, unchanged from the same period last month and down 5 percentage points from the same period last year. Enterprises remain relatively cautious in their wheat purchasing demand, with most still mainly buying as needed.
Due to low profits at processing enterprises, although current flour sales are poor, enterprises currently have a strong sentiment to hold prices, so flour ex-factory prices have mostly remained stable. Currently, the ex-factory price of special first-grade flour in the Beijing-Tianjin area is 3,120 yuan/ton, in Shijiazhuang, Hebei, it is 3,060 yuan/ton, in Jinan, Shandong, it is 3,080 yuan/ton, and in Zhengzhou, Henan, it is 3,060 yuan/ton, all unchanged from last week.
In early November, flour prices in the Southeast Grain Market of Zhejiang Province remained stable. On November 10, compared with the end of October, the average transaction price of special first-grade flour in the market was 3.36 yuan/kg, and the average transaction price of special second-grade flour was 3.16 yuan/kg, both unchanged.
Affected by the entry of aquaculture into the off-season and the slow growth of hog inventories, bran prices have recently been running basically weak. Currently, the ex-factory price of bran in Shijiazhuang, Hebei, is 1,030 yuan/ton, in Zhengzhou, Henan, it is 1,040 yuan/ton, in Jinan, Shandong, it is 1,000 yuan/ton, in Suzhou, Anhui, it is 1,100 yuan/ton, in Xuzhou, Jiangsu, it is 1,100 yuan/ton, and in Guangzhou, Guangdong, it is 1,320 yuan/ton, with little change.
At present, the theoretical processing profit of flour enterprises in various places remains at a relatively low level. On November 13, the purchase cost of medium white wheat in Zhengzhou, Henan, was about 2,300 yuan/ton, the ex-factory price of special first-grade flour was 3,060 yuan/ton, the bran price was about 1,040 yuan/ton, the processing cost per ton of wheat was 200 yuan, and the estimated theoretical profit was 60 yuan/ton, unchanged week-on-week.