Commodity and Marketing Programs
Foreign Agricultural Service
International Agricultural Trade Report
July 27, 1998
China: Rumblings in the Wheat Market; Corn Exports on Hold
Recent trade reports point to a smaller and quality-impacted 1998 wheat harvest, making a rise in
Chinese wheat imports an enticing possibility. However, abundant stockpiles and changing
government support policies will likely curb large-scale import demand. Additionally, a smaller wheat
crop reduces difficulties faced by overburdened grain storage facilities, which in turn relieves some
of the pressure to export large volumes of corn.
Lower-Than-Expected Wheat Crop Fuels Import Speculation...
Trade sources familiar with China’s wheat situation indicate that the crop may be around 110 million
tons, which would represent a 10 percent reduction from last years record harvest. Quality is also
reported to be poor in many areas. These projections have sparked speculation that imports may
exceed the 2 million tons currently forecast by USDA. Given that China imported nearly 2 million
tons of wheat last year, primarily for blending and speciality flours, expectations of a year-to-year rise
in wheat imports are quite reasonable. However, the record crops of 1996 and 1997 resulted in a
stock buildup that should temper imports to what is necessary for quality reasons.
...and Dampens Prospects for a Large Corn Export Program
A major impetus for China’s corn exports has been the total grain oversupply. A reduced wheat
harvest will help alleviate that situation. Coupled with low international corn prices, and slack
demand in China’s traditional Southeast Asian markets, there will likely be little pressure to export
corn until after the completion of the harvest in October-November.
Changes in Gov’t Support May Affect Size of Export/Import Programs
There is a serious effort underway in China to reduce state-owned enterprises’ dependency on central
government subsidies, although similar reforms have been attempted before without