China imports grain to replenish state reserves
April 30, 2013 Category Foreign trade, Weekly
China was forced to import wheat to boost state reserves as a result of a deterioration in its massive but ageing state stockpiles. China’s stocks were estimated to be enough to meet demand for six months, but substandard storage facilities have damaged part of the crop, some of which dates back to 2010. Sinograin, the state stockpiler, bought 1 million tons of U.S. soft red winter (SRW) wheat for the next marketing year, traders said. “We expect another 2 million to 3 million tons of imports because authorities are very worried about the volume of deteriorating wheat among state stocks,” said Ma Wenfeng, Analyst with Beijing Orient Agri-business Consultant Co. The government last year removed more than 900 private firms from the list of enterprises allowed to store wheat on behalf of the state. Tight supplies of good-quality wheat have helped drive up domestic prices to a record high, but the increase eased off recently when Beijing began to offer stocks from last year’s harvest at its weekly auctions. China’s wheat imports last year surged to an eight-year high of 3.69 million tons, consisting largely of feed-grade wheat bought to offset corn shortages. Most analysts estimate that the government still holds nearly 20 million tons of wheat from previous stockpiling, a comfortable level given the country’s annual consumption of 115 million tons.
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