Little chance of wheat policy adjustment next year
Due to numerous market rumors, and with domestic wheat prices currently on the low side overall, many farmers in production areas are finding it hard to decide how to plant wheat next year, and pre-planting preparations in production areas are progressing slowly.
"Compared with the same period last year, current wheat prices are on the low side overall, and coupled with the reduced per-unit yield caused by heavy rain in production areas during this year's wheat harvest, wheat farmers' income is lower than last year, and some large grain growers and agricultural cooperatives have even suffered losses on wheat planting." Li Jianjun, a wheat trader in Yanjin County, Henan Province, told the Futures Daily reporter that if the minimum purchase price policy for wheat is abolished next year, or the minimum purchase price for wheat is substantially lowered, then farmers in production areas will certainly reduce the wheat sown area by a large margin, and there may even be cases of farmers in production areas abandoning their fields.
Li Jianjun said that wheat market supply is currently somewhat tight, with most wheat having been purchased and put into storage by relevant institutions to become policy-driven stockpiled wheat, and wheat prices are expected to keep rising later on; however, due to worries that next year's minimum purchase price for wheat will be lowered, many traders and grain depots have now stepped up the pace of releasing wheat from storage, and demand enterprises such as flour mills have also appropriately reduced their production turnover inventories. Still, in the view of Hu Yongxin, a wheat trader in Yixing City, Jiangsu Province, the probability of an adjustment to next year's minimum purchase price policy for wheat is not high. The reasons are, first, that since the listing of this year's newly produced corn, major adjustments have appeared in the domestic corn market policy: on the one hand, the temporary storage purchase policy for corn was fully abolished, and on the other hand, the "separation of price and subsidy" policy was fully implemented, which has filled the corn market with variables. Whether the market can operate steadily after large quantities of new corn are listed, and how all parties in the market will respond to the new policy, are questions no one can currently give a clear answer to. Under such circumstances, the relevant institutions will certainly not make another big move in the staple food grain market, and next year's minimum purchase price policy for wheat will therefore not be adjusted.
As for whether it will be adjusted in the future, that depends on how effective the policy adjustments in the corn and other agricultural product markets are. Second, in recent years the supply and demand in China's wheat market have basically been in balance, wheat output has not seen large growth, and in some production areas such as Hebei the sown area has even been reduced. Importantly, the main market purchasers are institutions such as Sinograin, and although domestic wheat stocks appear enormous, in reality there is a problem of excessive concentration. From the perspective of ensuring staple food security, the wheat market policy will not suddenly undergo major adjustment.
Analyzing the current state of domestic and international agricultural product markets, several experts believe that because major grain and oil producing countries in the international market have increased output, and domestic grain and oil output is also trending upward overall, the prices of major global grain and oil varieties are at historic lows. At this time, it is very important to maintain farmers' enthusiasm for growing grain and to keep the output of important grain and oil varieties from suffering a "cliff-like" decline due to excessively low prices, which is also conducive to preventing a sharp rise in grain and oil prices in the future. Therefore, the probability of an adjustment to next year's minimum purchase price policy for wheat is not high.