Wheat prices are gradually stabilizing and the upward momentum is slowing; where will prices settle this year?
Friends who follow Science for Agriculture should know that I am still relatively optimistic about this year's wheat market, but although I am optimistic, I do not think it will keep rising blindly. Judging from the current market situation, 1.4 yuan per jin may basically be the peak. The reason I mention this price level is also because this price level is a threshold.
As for this year's wheat market, it has probably surprised quite a few people. Because the state support price for wheat procurement was lowered again this year, many people working in agriculture, rural areas and among farmers took a bearish view of the wheat market. However, when the wheat was harvested, widespread consecutive overcast and rainy weather in the main wheat-producing areas across the country, combined with winter frost damage to wheat, caused this year's wheat not only to suffer yield losses but also quality losses!
Stimulated by this, the wheat market saw prices climb steadily after the wheat harvest began. Overall, this year's wheat market prices will be higher than last year's, but the increase will not be too large. After all, as China's staple grain crop, wheat's market position needs to remain stable. Price fluctuations will not be too great.
At present, wheat market prices are basically generally around 1.25 yuan per jin, one mao higher than the support price. This price level should be considered quite good. However, under market economy conditions, prices are still determined by supply and demand. Although China's wheat output is large, demand is also enormous. With this year's overall wheat production decline, the market's supply-demand relationship has also changed somewhat. The tightening of domestic wheat supply and demand is also a major factor supporting the rise in wheat prices.
However, as I mentioned earlier, the increase is limited! One reason for this limit comes from the stabilizing effect of the temporary reserve on market grain prices. As an invisible hand in the market, its ability to regulate wheat prices is beyond doubt. In early June, a single announcement by the temporary reserve to suspend wheat auctions quickly drove wheat prices up, which shows the position of the temporary reserve in the market.
The other reason comes from the impact of low-priced, high-quality foreign wheat. A reality we have to face is that even when foreign wheat is shipped to China's ports, its price is still lower than that of China's wheat, and the quality of imported wheat is better than China's wheat, making it more suitable for bread processing.