15th Jun 2012, by Agrimoney
US grain industry scouts deepened the cloud over Chinese wheat by saying that 5m tonnes may have been lost to disease, trumping a downgrade by Beijing of its harvest forecast.
While China's corn crop has made a "strong start", and set for a bigger rise than many analysts have factored in, its impact on boosting feed grain supplies is being offset by a disappointing outlook for the corn harvest, the US Grains Council said.
"A severe blight may reduce China's winter wheat harvest by up to 5m tonnes," the council said following a crop tour in the north of the country.
The country, which produced some 117m tonnes of wheat last year, had been seen on target for a harvest of about 120m tonnes in 2012.
'Quality is poor'
The comments come amid growing fears over the winter wheat crop, of which more than half has already been harvested, and which forms the great bulk of China's wheat output.
Indeed, separately, the China National Grains and Oil Information Centre, the official crop bureau, cut by 2.3m tonnes, to 117.7m tonnes, its forecast for the winter crop, while reducing its estimate for the overall wheat harvest by 2.3m tonnes to 118m tonnes.
"Output is lower than expected, while quality is also poor," the bureau said.
Crop prospects have been hurt in part by drought in the north eastern province of Hebei.
But the main problem has been wet weather, which has encouraged fungal diseases such as fusarium, or wheat scab, which lower yields, and is also being seen with greater frequency in rain-soaked parts of Europe, including the UK.
Rising imports
The downgrade represents the latest in a rash of concerns over wheat harvests, with dry weather continuing to depress expectations for output in parts of Russia and Ukraine, besides the US, while Australia this week cut its forecast for the domestic crop.
China's plight gained centre stage on Thursday when the country was revealed to have made its biggest order in eight years of US soft red winter wheat, the type traded in Chicago, of 110,000 tonnes.
China has already been raising purchases of Australian wheat, importing more than 350,000 tonnes in March, five times the level a year before, according to Canberra data.
The shipments took total Chinese imports of Australian wheat in the first three months of the year to 854,590 tonnes.
"Chinese import demand for wheat has been elevated over recent months on feed wheat substituting corn as well as on lowered domestic production," Sudakshina Unnikrishnan at Barclays Capital said.
However, unlike with corn, in which China is expected to become a structural importer, the country's wheat imports have not fostered so much market attention, with a focus by Beijing on food supplies expected to depress long-term needs for tapping the global market.
'Favourable conditions'
The US Grains Council's estimates for the a 5m-6m tonne rise in the corn crop imply a harvest bigger than the US Department of Agriculture is factoring in.
The USDA has pegged China's corn harvest this year rising 2.2m tonnes to 195.0m tonnes.
However, the CNGOIC foresees a crop of 197.5m tonnes, a rise of 5.75m tonnes year on year.
Prospects for the harvest in China's key north east region have been boosted by higher sowings and "favourable" growing conditions, the US Grains Council said.
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