Wheat harvest has begun, this year's prices slightly lower than last year

It is reported that the National Development and Reform Commission, the Ministry of Finance, the Ministry of Agriculture, the State Administration of Grain and others announced on May 18 the "2015 Implementation Plan for the Minimum Purchase Price of Wheat and Rice." According to the plan, the minimum purchase price for white wheat, red wheat and mixed wheat is all 1.18 yuan per jin, unchanged from the 2014 level.

It is once again the time of the three summer tasks. Now that Xiaoman has passed and Mangzhong is approaching, the wheat fields have reached the ripening season, and the three summer wheat harvest is slowly unfolding from south to north.

At the end of May, Jiangsu, Hubei and Anhui respectively launched the minimum protective price market-support purchase of wheat. The wheat minimum purchase price, which had been raised every year, stopped its pace this year. The wheat minimum purchase price announced on May 18 was 1.18 yuan per jin, flat with last year. What does the wheat minimum purchase price, which has halted its upward range, mean for this year's wheat market? How will this year's wheat market trend develop?

It is reported that the National Development and Reform Commission, the Ministry of Finance, the Ministry of Agriculture, the State Administration of Grain and others announced on May 18 the "2015 Implementation Plan for the Minimum Purchase Price of Wheat and Rice." According to the plan, the minimum purchase price for white wheat, red wheat and mixed wheat is all 1.18 yuan per jin, unchanged from the 2014 level.

In Shanxi Province, farmers are busy harvesting wheat. Du Ninglong, a farmer in Xiafeng Village, Xia County, planted three mu of land, and the rest was planted with economic forest nectarine trees. He is full of hope for this year's wheat sales.

Du Ninglong: The wheat harvest is very good. One mu of land now yields about one thousand jin. The rain this year has been all right, better than the previous two years. Usually it needs two or three waterings, but this year only one watering, so the investment is less, the yield is higher, and the benefits are better.

At present, newly harvested wheat in Jiangsu, Anhui and Hubei provinces and southern Henan has begun to appear sporadically on the market. According to the reporter's understanding, the purchase price of newly produced wheat by individual grain traders in some producing areas of Hubei and Anhui is only 1.05—1.10 yuan/jin, with relatively high moisture content. The opening scale prices of new wheat in various places are slightly lower than last year, said Li Hongchao, analyst at Sublime China Information:

Li Hongchao: Starting from May 20, in the Yangtze River basin, new wheat in Hubei began to be listed, followed successively by Hubei, southern Anhui, southern Henan and southern Jiangxi. But the opening scale price of new wheat was lower than the minimum protective price set by the state, so after a week the state launched the market-support purchase.

Jiangsu Province took the lead on May 26 in launching the implementation plan for the minimum purchase price of wheat, with listed purchases one day earlier than Hubei Province's launch of the implementation plan for the minimum purchase price of wheat nationwide last year. Hubei Province and Anhui Province then also launched it one after another. For grain-growing farmers, the guarantee of minimum price purchases has made growing grain much more reassuring.

Du Ninglong: There are subsidies for growing grain, and the subsidies can be received. Even if the subsidies are received, farmers still calculate farmers' accounts. For the same one mu of land, or growing economic forest, or growing greenhouses and hothouses, one can make ten or twenty thousand yuan, so it is not worth it.

According to analyst Li Hongchao, this year, affected by weather and climate, wheat in the central and southern areas of Hubei has some fusarium head blight; the situation in southern Henan this year is better, and so far no fusarium head blight has appeared. The market currently needs to worry about whether sprouted wheat will appear when the later wheat is listed.

Li Hongchao: At present, it is expected that the listing volume of new wheat in June will be relatively concentrated, and will gradually advance from Jiangsu and Anhui to Shandong and Hebei. Affected by policy and increasingly active market supply and marketing, the supply and marketing degree of new wheat will be relatively active.

As of May 28, Anhui had harvested 2.773 million mu of wheat, accounting for 6.51% of the progress to be harvested. Wheat prices are generally very obviously affected by policy. In order to protect farmers' interests, the state launches market-support purchases when market prices are relatively low.

Li Hongchao: The state grain depots will purchase at the 2015 minimum protective price of 1.18 yuan per jin, which thus raises the market price. In addition, after the state opens grain depot purchases, it also gives confidence to all kinds of entities.

From the current domestic wheat market situation, after new wheat is listed, the market faces relatively great supply pressure. At the same time, with flour and bran sales sluggish and prices at historic lows, the largest demand user of wheat—flour milling enterprises will not purchase large quantities of new wheat as in previous years. Li Liansheng, analyst at Yide Futures.

Li Liansheng: At present, domestic wheat demand is weak, and the market expects that this year will still maintain a weak operating state. Under this market expectation, the entire market participants will still maintain a relatively pessimistic attitude toward this year.

In the last ten years, China's wheat planting area has been relatively stable, at about 360 million mu, with not much fluctuation. As new wheat is gradually listed this year, Li Hongchao expects a bumper harvest in the domestic wheat market this year, with overall output somewhat higher than last year.

Li Hongchao: Another point is that during our research we found that this year's wheat seedling condition is relatively good. If no severe weather occurs during the harvest period, the expectation of a bumper harvest is very high.

Last year's minimum purchase price was also 1.18 yuan per jin. Around October, the wheat price reached the annual highest value of 1.3 yuan per jin. With this year's wheat minimum purchase price unchanged, market entities such as individual grain traders and flour milling enterprises are relatively cautious about entering the market to purchase. In addition, many grain enterprises are short of funds, and new wheat purchases are sluggish, with few instances of large-scale purchasing by grain-using enterprises. This has caused the new wheat purchase price to show an obvious downward trend, and this in turn has aggravated the market's bearish sentiment on wheat prices.

Li Liansheng: Since the implementation of the minimum purchase price in 2006, the annual wheat minimum purchase price had been raised every year, but starting this year the wheat purchase price has not been raised. In addition, domestic stocks are relatively sufficient and demand is also relatively weak. The entire current market situation is not optimistic for the later trend of wheat.