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Special One Grain Commodity Market Update

16/03/10
The Chinese wheat production in 2010/11 is estimated at 114mmt, vs. 114.5mmt in 2009/10. Nothing out of 
the ordinary has occurred this winter across Chinese wheat areas; temps were low in central China in Jan and 
Feb,  and  snow  cover  was  adequate.  Temps  have  since  warmed  and  the  crop  will  soon  exit  dormancy  amid 
abundant soil moisture as the pattern has shifted to wetter in recent weeks. Spring wheat areas plantings are 
not  threatened  with  an  abundant  amount  of  moisture.  When  analysing  production,  trend‐line  yields  are 
assumed. China’s wheat yield has increased steadily in the past decade, with trend yield now at 4.85 mt/ha. 
With production forecasted at 114mmt, and 09/10 ending stocks would produce total supply of 175.3 mmt, up 
11.8 mmt from the previous year.  
 
China Wheat Production & Yeild
Chinese  wheat  exports  are  estimated  at  2 
140,000
mmt compared to 1 mmt in 2009. China will  6.00

actually  have  a  larger  exportable  surplus  in 
Production
Yeild
120,000 2010/11,  assuming  normal  spring  weather,  5.00

but  increased  competition  from  Europe  and 
100,000
across  the  Black  Sea  will  simply  cap  export  4.00

potential. 
Production (K mt)

80,000
Yield (t/Ha)

Additionally,  China  wheat  prices  will  not  be  3.00

60,000
sustained  at  higher  international  levels  with 
40,000
cheaper Russian and French wheat available.  2.00

But  even  amid  record  domestic  demand, 
20,000 Chinese  wheat  stocks  will  be  overwhelming,  1.00

a theme projected in 2010/11.  
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10/11

Figure 1

Chinese  ending  stocks  last  year  are  projected  at  an  eight‐year  high  60.8  mmt.  Stocks  in  2010/11  assuming 
normal weather and near‐record demand is estimated at 67.3 mmt, and increase of 6.5 mmt.  
There seems to be no shortage of wheat in China and certainly no imports are expected except from high quality
millers in close proximity to China.  
In the past decade China has consistently purchased wheat from domestic producers to stockpile into reserves. 
China has kept stock/use ratio of other grains at 30‐40%, which has kept prices at acceptable levels for both 
producers/consumers. Wheat may be released from China’s reserves amid considerably large stocks/use ratios 
with  any  exports  being  feed  wheat.  Amid  all  this  wheat,  China  has  no  reason  to  import  other  feed  grade 
commodities. 

Advance Trading Australia | Special One Grain 1
Figure 2

One area of concern in the past week that has surfaced is Ukraine.  On Monday, Interfax Ukraine news agency 
reported that frost and ice have killed 1.6 percent of Ukrainian winter grain area as of March 11 compared to 
0.3  percent  a  week  earlier.    The  data  also  showed  the  area  under  ice  crush  rose  to  9.1  percent  from  7.2 
percent.  All told, the agency said about 13.5 percent of the winter grain area, or 1.1 million hectares, were in 
poor state as of March 11 vs. 10.3 percent in late February.  For perspective, ice on Ukrainian fields killed about 
one  million  hectares  of  winter  crops  in  the  2007/08  crop  year,  causing  a  decrease  in  wheat  production  to 
13.7mmt.  In contrast, output the past two years was 25.9 and 20.9mmt, respectively. 

ATA Notes: In years of ample supply, Ukraine has proven to be an aggressive exporter.  For example, on the 
heels  of  the  short  crop  in  2007/08,  exports  only  totaled  1.2mmt.    That  number  soared  to  13.0  last  year, 
however, and is forecast to be 9.0 in 09/10.  A poor crop in 10/11 may nudge open the export window for the 
U.S. and Australia ever so slightly.  We will be monitoring crop prospects closely this spring.  

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