Heavy rains disrupt China’s wheat harvest

Peter McMeekin for Grain Brokers Australia, June 7, 2023

Accumulated precipitation (mm) in China from May 22 to June 5 shows some of the heaviest falls have occurred in Henan province, the country’s major wheat-growing region. Source: US National Weather Service

RECORD heat in early May has given way to torrential rain, flooding wheat fields in China’s main winter-cropping provinces just as farmers prepared to harvest this year’s crop. The extent of the damage is yet to be determined, but there are reports that up to 20 percent of the country’s wheat crop has been affected, leaving farmers grappling with significant quality downgrades due to mouldy and sprouted grain.

China is the world’s biggest producer and consumer of wheat each year, with the USDA pencilling them in for 140 million tonnes and 149Mt respectively in 2023-24. That equates to 17.7pc of global production and 18.8pc of global consumption. Any decrease in Chinese wheat production will likely see a similar increase in import demand, with the damaged wheat channelled into the domestic stockfeed sector at a heavy discount. This will probably be at the expense of imported corn, a trend already evident prior to the recent crop damage.

Henan hardest hit

Henan province, also known as the “granary of China”, has reportedly been the hardest hit, with local media calling it the worst pre-harvest rainfall in over a decade. Less than 25pc of the province’s wheat harvest had been completed when the rains hit, with the province expected to produce around 38Mt this year, or more than 27pc of the USDA’s national production estimate.

Rainfall in China 7-days to May 31. Source: World Weather, Inc.

Chinese weather reports described the relentless rainfall, which fell May 25-29, as the region’s broadest and longest-lasting rain event since 1961. While not historically prone to heavy rainfall, Henan has experienced multiple extreme rain events in recent years. In 2021, torrential downpours flooded central Henan, resulting in over 300 fatalities and direct economic losses of around 120 billion yuan (US$16.5 billion).

However, rainfall of varying degrees was also recorded in most of the wheat-producing regions of central and southern China, with farmers in parts of Anhui, Hebei, Hubei, Jiangsu, Shaanxi and Shandong provinces reporting lesser degrees of crop damage.

Chunk of crop downgraded

Ma Wenfeng, a senior analyst with Beijing Orient Agribusiness Consultancy, reportedly told the Reuters news agency that the rains had affected most of the wheat-producing regions of central and southern China, not just Henan province. Ma estimates that as much as 30Mt of the consultancy’s anticipated national crop of 137Mt had been affected, with at least 10Mt, and as much as 20Mt of that wheat sprouted and unfit for human consumption. Grain in some of the worst affected areas is reportedly infected with Fusarium head blight and cannot be fed to animals.

More rain forecast

The unseasonal precipitation was expected to continue over the weekend just gone with Henan’s weather observatory expecting the central, western and southern parts of the province to receive moderate to heavy rainfall from Saturday afternoon through to Sunday evening, with falls of up to 80mm possible in some districts.

China’s Meteorological Administration advised the local press at a briefing last Friday that extreme weather conditions were likely to persist throughout June, with rainfall in most parts of the country expected to be higher than average. Temperatures are also expected to be above normal, elevating humidity levels and exacerbating crop damage. Last year was a drought in the Yangtze River basin, with temperatures regularly exceeding 40 degrees Celsius, and the Meteorological Administration warned that temperatures could be 1-2 degrees higher again this year.

China’s agriculture ministry has urged local authorities to mobilise emergency teams to alleviate the food emergency by draining water from fields to speed up harvester access and setting up drying machinery to save as much of the crop as possible. Contrasting this urgency were reports that trucks carrying harvesting equipment were prohibited from leaving a major highway last week because they had not completed the required paperwork.

China becomes No. 1 wheat importer

Meanwhile, China’s wheat imports soared by 80pc in the first four months of 2023 on the back of falling
international prices relative to domestic values. Chinese ports discharged almost 6Mt of wheat from January 1 through to April 30, equal to 60pc of total 2021-22 wheat imports. April imports alone jumped 141pc year on year to 4.7Mt. Conversely, corn imports slid 54.6pc to 1Mt compared to April 2022.

According to Zheng Wenhui, a grain-economy researcher at Guangdong South China Grain Trading Centre, the rising imports are due to an elevated level of optimism among Chinese processing companies around replacing domestically grown wheat with imported product in stockfeed rations. This has led to a significant increase in the import volumes of feed and lower-grade milling wheat from Australia.

The events of the past two weeks will change the equation somewhat, maybe pushing the focus a little further up the quality spectrum for the balance of the year.

According to China’s General Administration of Customs, 60pc of wheat imports in the January to April
period were from Australia. Imports from Canada accounted for 19pc of the total, followed by France
with 13pc and the United States at 8pc. The Australian Bureau of Statistics export data for the
December to March period, which should line up quite well, taking into account sailing time and port
congestion, was 3.647Mt which corroborates the Chinese customs data.

China has also stolen the mantle of the world’s biggest importer of wheat in the year ended June 2023, with the May global supply and demand update from the USDA putting them down for 13.5Mt, 41pc higher than the 9.568Mt imported in 2021-22. Egypt was the biggest importer last season at 11.256Mt, followed by Indonesia at 11.259Mt and then China in third place. The USDA currently has China dropping back to third place in 2023-24 with imports of 10.5Mt, but that is likely to be on the low side if the crop damage is as bad and as widespread as the quite sketchy Chinese reports are currently indicating.


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