2016 wheat minimum purchase price remains unchanged, wheat prices expected to stop falling
The reporter recently learned from the National Development and Reform Commission that in order to protect farmers' interests and prevent “cheap grain hurting farmers,” the government will continue to implement the minimum purchase price policy in major wheat-producing areas in 2016. Taking into comprehensive consideration factors including grain production costs, market supply and demand, domestic and international market prices, and the development of the grain industry, and with the approval of the State Council, the minimum purchase price for wheat (third grade) produced in 2016 is 118 yuan per 50 kg, remaining unchanged from the 2015 level, in order to stabilize grain production and promote the healthy development of the grain industry.
“The announcement of next year's wheat procurement and storage policy is very timely. It will play a role in stabilizing market prices and boosting farmers' enthusiasm for growing grain.” Wang Yingzhong, business manager of the First Grain Depot in Jining, Shandong, told the reporter that domestic wheat-producing areas are currently in the sowing season, and the price decline has left many farmers in a wait-and-see state. Because wheat prices have fallen too quickly, some farmers have already entertained the idea of planting less wheat.
Wang Yingzhong said that before the policy was announced, the market widely expected that next year's minimum purchase price for wheat would be lowered by 0.1 yuan/jin. After entering October, spot market prices in major domestic wheat-producing areas fell by 0.07-0.1 yuan/jin within one week, which made wheat traders, flour-milling enterprises, and grain-growing farmers feel even more uncertain, and the downward trend in wheat market prices was difficult to stop. It is estimated that after the policy is announced, domestic wheat market prices will quickly stop falling and rebound, panic in the market will weaken, and farmers' enthusiasm for growing grain will also increase.
According to the reporter's understanding, autumn crops in major domestic wheat-producing areas have basically been harvested, and wheat sowing work is in full swing, with the sown area expected to remain relatively stable. At the same time, because the price of high-quality wheat has been far higher than that of ordinary wheat in the past two years, the sown area of high-quality wheat this year is estimated to have increased considerably.
“The current ex-warehouse price of Xinmai 26 high-quality wheat produced in Henan is 1.38-1.42 yuan/jin, while the ex-warehouse price of ordinary wheat is around 1.15 yuan/jin. The price gap between the two is very large. In addition, the supply of domestic high-quality wheat has consistently been relatively tight. It is expected that next year's high-quality wheat price will still remain at a high level. This year many farmers expanded the sown area of high-quality wheat.” According to Liu Zhang, an agricultural materials dealer in Weihui, Henan, the rapid decline in corn and ordinary wheat prices basically did not have much impact on high-quality wheat. After the wheat procurement and storage policy was announced, as wheat market prices generally stabilized, high-quality wheat prices will very likely rise slightly, and farmers will naturally be willing to plant more high-quality wheat.
Wang Yingzhong told the reporter that as of now, about 10% of Shandong Province's total wheat area has been sown. One prominent feature is that the area of high-quality wheat has increased considerably, among which the high-quality wheat variety Xinmai 26 is very popular with farmers.
Luo Jiahui, a wheat trader in Jingzhou, Hubei, told the reporter that after the policy was announced, he no longer felt panicked, and he was no longer in a hurry to sell the more than 500 tons of wheat in his hands, waiting to sell when the price was suitable. “Before that, watching wheat prices slide all the way was very painful.”
However, some market experts believe that due to sluggish market demand and the overly large decline in prices of agricultural products such as corn, although the announcement of the wheat procurement and storage policy has created conditions for wheat prices to stabilize and is conducive to wheat prices stopping their decline and rebounding, it will be difficult for wheat prices to rise significantly in the short term, and the long-term trend of market prices will mainly depend on supply and demand conditions later on.