New wheat market-support purchase program launched, prices rising rapidly
As the wheat harvest in the main producing areas advances from south to north, the volume of new wheat coming onto the domestic market has continued to increase, yet new wheat prices have not declined; instead, they have risen rapidly over the past week.
"When new wheat first came onto the market, the purchase price of newly harvested common wheat in the Zhoukou area was only 1.1-1.13 yuan/jin, and in the past few days it has risen to 1.2 yuan/jin," Tan Songgen, a wheat trader in Fugou County, Zhoukou City, Henan Province, told the Futures Daily reporter. The rapid rise in new wheat prices is closely related to Sinograin's timely launch of the minimum purchase price execution plan for wheat.
According to the reporter's understanding, as of now, Jiangsu, Hubei, Anhui and Henan provinces have launched the minimum purchase price execution plan for wheat, and the new wheat that came onto the market in a concentrated manner has finally found its "home."
In recent years, market players such as traders, grain depots and flour milling enterprises have purchased and hoarded large quantities of new wheat when it came onto the market, but ultimately found it difficult to profit. After this year's new wheat came onto the market, market sentiment was strongly wait-and-see, and many market players delayed the time for purchasing new wheat. This caused the opening prices for new wheat to be generally low, and in many areas the opening price for new wheat was lower than the minimum purchase price for wheat announced by the government, so farmers' grain-growing returns could not be guaranteed. Faced with the situation of new wheat prices opening low and moving lower, governments at all levels and Sinograin's head office and regional branches actively consulted and promptly launched the minimum purchase price execution plan for wheat.
Tan Songgen said that during this year's wheat harvest, most areas of Zhoukou did not experience rainy weather like surrounding areas, which meant local new wheat had low moisture content, not exceeding 12% at the highest, and the test weight of the new wheat was also relatively high. Out-of-town wheat traders, flour milling enterprises and grain depots came to Zhoukou one after another to purchase new wheat, which is another reason local new wheat prices rose rapidly.
"Jiangsu, Hubei, Anhui and southern Henan all experienced rainy weather during the wheat harvest, which caused the proportion of sprouted wheat in new wheat in some areas to be relatively large, with the proportion of sprouted wheat in individual areas reaching as high as 20%. The market expects that the quantity of high-quality wheat this year may decrease." Qi Kai, a wheat trader in Hua County, Henan Province, believes that the government's timely launch of the minimum purchase price execution plan for wheat gave the market a "reassurance pill" and also limited the room for new wheat prices to decline.
At the same time, the quantity of better-quality new wheat was less than expected, bullish market sentiment recovered, and some market players changed their purchasing approach. Some well-funded traders and large flour milling enterprises took the lead in starting purchases, wanting to seize the opportunity of concentrated new wheat market arrivals to "grab" good grain, which helped push up new wheat prices.
"Our grain transport ship has already arrived at the Shahe wharf in Xiangcheng County, Zhoukou. As long as there is a price spread, we will purchase new wheat as trading grain," Qiang Sheng, a wheat trader in Nanjing City, Jiangsu Province, told the reporter. This year the quality of new wheat varies greatly across regions, and grain-using enterprises have different requirements. This year he plans to purchase and stockpile some wheat in various places for future trading use.
The reporter also learned from grain, agricultural machinery and other departments in Jiangsu, Henan and other provinces that, as of now, the progress of new wheat harvesting and purchasing in various places is relatively normal, and in individual areas the poor quality of new wheat has slowed purchasing progress. In terms of new wheat prices, in most areas new wheat prices have risen to the minimum purchase price level announced by the government, while in some areas the prices of new wheat with higher moisture content are below the minimum purchase price, and farmers are relatively active in selling grain.