Boston, MA -- (SBWIRE) -- 01/09/2014 -- Wheat is one of major grain varieties around the world, and an important grain crop in China. In 2012, the planting area of wheat in China was 24.139 million hectares, decreasing by 131,000 hectares YOY; the output volume per hectare was 4,995kg, increasing by 158kg YOY; the total output volume of wheat was 120.58 million tons, increasing by 3.18 million tons.
Wheat is widely applied in many fields. It can be milled into flour and used for food processing and wine brewing. It can also be used as pharmaceutical raw materials and forages.
Most wheat is milled into flour in China at present. The total flour consumption keeps increasing steady, and the wheat flour consumption remains stable. With the increasing living standards of Chinese people, the consumption per capita of meat, dairy products and eggs keeps rising. Therefore, the consumption per capita of flour as grain ration can hardly grow and will even decrease. The major driving force of the wheat consumption is the industrial demand.
Wheat has a substitutional relation with corns if both are used as forages. For example, the price ratio between wheat and corns was 0.89 in 2011, decreasing by about 12% YOY and becoming the lowest ratio since 1999; the consumption of wheat forages was significantly promoted in 2011, reaching over 10 million tons. The price ratio began to increase since 2012. The consumption of wheat used as forages obviously decreased with the increasing price ratio between wheat and corns.
As the population keeps rising and people's consumption level is improved, the demand for wheat keeps increasing. However, with the improved urbanization level and low profits of grain planting, the number of labor force that engages in agricultural activities keeps decreasing and the output volume of grains can hardly significantly increase. To encourage the development of the grain planting industry, Chinese government has issued a series of polices, including "grain procurement at protective prices" which means the government will procure a part of grains when their prices decrease. In October 2013, Chinese government declared that the lowest procurement price of (Grade 3) wheat in 2014 will increase to 2,360 CNY/ton, up by 5.08% YOY. However, the output volume of wheat in China can hardly increase in the next few years.
As domestic output volume of wheat cannot meet the market demand and it is low-quality, China begins to energetically import wheat in recent years. In 2012, the import volume of wheat was 3.689 million tons, increasing by over 100% YOY; 645,000 tons of wheat was imported from the U.S.A., taking up 17.5% of that of all imported wheat. It is predicted that the import volume of wheat in China will keep increasing in the next few years.

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