Why have prices for high-quality wheat in southern Hebei and northern Henan risen so sharply?

This year, because the wheat harvest in southern Henan encountered rainy weather, the wheat developed imperfect kernels and even sprouted grains. As a result, the quality of high-quality wheat varieties in southern Henan, mainly “Xinong 979”, is generally poor. High-quality wheat in northern Henan and the Hebei region has become the main target of attention in the industry. Among these, the Hebei region is the main one.

“The price of high-quality wheat in Hebei has risen very quickly.” Li Feng (pseudonym) is an employee of a grain trading company specializing in high-quality wheat. He believes that this year high-quality wheat prices have begun to show bubble-like risks.

After the 2014 summer harvest, because flour mills had relatively high demand for high-quality wheat, the prices of “Gaoyou 2018” and “Shiluan 02-1” rose rapidly.

“Many grain brokers, drawing on last year's experience, believed that high-quality wheat would also have a good market this year, and rushed into the market to snap it up.” Li Feng said this quickly pushed up the purchase price of high-quality wheat. “Taking ‘Shiluan 02-1’ as an example, after the opening of the market, the purchase price quickly rose to 1.27 yuan/jin, and after just one week it soared to 1.3 yuan/jin. Now, even at a price of 1.4 yuan/jin, it cannot be bought.” “It is not that there is no goods on the market, but that many brokers are waiting to sell at a better price.” Li Feng said.

A grain broker in the Xingtai area of Hebei believes that the rapid rise in wheat prices is related to the entry of social capital into wheat purchasing. “Many cotton brokers or people doing miscellaneous grain business here have all started entering the market this year to purchase wheat, waiting to sell after the Mid-Autumn Festival.” According to him, it is instead the grain brokers who have long been engaged in wheat trading whose business approach has changed this year, selling as they buy and not hoarding wheat. However, driven by the market trend, many farmers are optimistic about the later period, and therefore have begun to store wheat and hold it back from sale.

“Farmers generally believe that even ordinary wheat can rise to 1.25 yuan/jin after being stored for one month, and by August it should rise to 1.3 yuan/jin. Therefore, it is expected that the wheat here will only come onto the market in volume after August.” the above-mentioned grain broker said.