cancel
Showing results for 
Search instead for 
Did you mean: 
Senior Contributor

China muscling in on wheat production problems?

China has a drought going in it's main what production areas amounting to 2-3 million hectares in the north. This has been an ongoing problem for the last half dozen years or so, so it isn't an indication that things can't turn around as before. However, statements indicate that production is going to suffer in some areas because the wheat hasn't developed normally.

 

The point is, one time or another these winter dry spells will extend into spring and summer and there will be extensive production problems. If that happens it will demonstrate why China insists on maintaining a year's supply of wheat. Some say it's too innefficient and costly to maintain these reserves. '07-08 put a pretty big dent in the idea that industrial 'just in time delivery' can be applied to grain commodities because of the inherent and uncontrollable 'Normal Production Variation' that is neither predictable (check out Australia today) or accounted for by something like futures trade, which IMO is one of its biggest failings.

 

China has decided that whatever the 'innefficiency' of large grain stores it would prevent costly damages to a social order that is famously insecure about food supples. And perhaps mitigate the damage to the global well being if it had to compete for large supplies with other societies that are more at risk and more unstable or risk a backlash for running up prices to procure supplies of food it must have.

0 Kudos
5 Replies
Contributor

Re: China muscling in on wheat production problems?

Greetings Palouser  Always appreciate your insight and posts on the wheat.Shoes continue to drop and the bid for corn and bean acres has not begun, so my question is do you think the wheat is capable of a blow off top simiarlly to 2008.Thanks again for posts

0 Kudos
Senior Contributor

Re: China muscling in on wheat production problems?

At this point I don't see wheat getting as carried away as in '07-08. If there is continuing problems with hi pro wheat production then I think the pressure would show in the Minneapolis exchange for spring wheat.

 

OK, if the Auusies continue to get heavy rain (predicted for a week in the east) spreading down into South Australia (it is) and it it is relentless as it has been, then I see wheat advancing quite a bit. Then it gets complicated. How will Argentine wheat finish? Will the China drought continue (I'd bet against it at the moment, but it's early). And I still haven't heard how well Pakistan's wheat planting has gone, but plenty of local stories that there are complications from the flood that has disrupted distribution of seed and fertilizer.

 

Right now one must watch and count the cards falling.

0 Kudos
Senior Contributor

Re: China muscling in on wheat production problems?

Pal......... Once again you have hit the mark as it relates food and the just in time model that the world has used for years now...... It is my belief that the world is heading for a disaster as it relates to food....... we are just one "88" type drought away from what IMHO people will have there lives changed forever....... I think that the world will forever change there thinking if or should I say when this happens.......p-oed

0 Kudos
Frequent Contributor

Re: China muscling in on wheat production problems?

To be honest, I cannot remember the last winter in which the Chinese did not complain about dry conditions in their winter wheat area.

 

By the same token...can anyone remember the last time that the Chinese had a really poor wheat crop?

 

We are going to hear a lot more stories about Chinese drought in their wheat areas all winter long...probably even worse than this week's stories. Why? Because Chinese wheat areas normally get virtually NO precipitation during the winter!!!

 

As is the case each and every year...drought now in Chinese winter wheat areas means nothing...its is all up to the seasonal increase in moisture that occurs in the spring.

0 Kudos
Advisor

Re: China muscling in on wheat production problems?

Pal, some time ago, within a year maybe I saw a program on one of the informative TV channels (Discovery, NatGeo. etc) about the deserification of China and how they lose thousands of acres of productive land a year from overgrazing.  I've never seen this mentioned on here but it is something to consider.  When I saw it I was surprised China let it be filmed and broadcast.

0 Kudos