U.S. farmers are reaping a big harvest as China (Communist Party of China) is snapping up U.S. exports of white wheat, commonly used to make sponge cake and noodles, which are set to be pushed to a 27-year high.
China’s rush to buy grains and oilseeds during the Communist Party’s viral pandemic has pushed prices of the major commodity crop to multi-year highs, with China booking more U.S. white wheat this year than any other country except the Philippines, the grain’s top buyer, Reuters reported on Dec. 12. Chinese traders and analysts say the recent purchases reflect strong demand for animal feed.
On Tuesday (9), the U.S. Department of Agriculture (USDA) raised its export estimate for white wheat to 245 million bushels (BU), the most since 1994, in light of strong demand from China and South Korea. The USDA previously lowered its export estimate due to lower demand in several Western Hemisphere markets.
“Because of high corn prices, most imported wheat is going to the feed industry given the margins.” said Li Hongchao, senior grain analyst at trade website Myagric.com.
China is currently scouring the world for feed grains as it tries to rebuild the world’s largest pig herd ravaged by African swine fever. Because of high corn prices, white wheat, which is not normally used to feed animals, has become a viable option for China.
Recent trade tensions between China and Australia have also led China to seek alternative supplies of its hard white wheat.
Nine months into the 2020-2021 wheat marketing year, which began June 1, 2020, China’s total purchases of all grades of U.S. wheat reached 2.9 million tons, a seven-year high, according to weekly export sales data from the U.S. Department of Agriculture. Bookings of white wheat, which accounts for about one-third of total exports, stood at 947,863 tons as of March 4.
China’s purchases of U.S. white wheat began to increase last November, after nearly stagnating when the U.S.-China trade war raged.
U.S. white wheat, mostly soft white wheat, is grown in the Pacific Northwest and is popular with bakers for its light color and low gluten strength, making it ideal for making cakes and buns.
The booming export market for white wheat has earned a premium for U.S. farmers, with prices at the Portland, Oregon, export center currently around $7.50 per bushel, up about $2, or 35 percent, from just after the July harvest.
Cordell Kress, an Idaho grower, said he has sold about 1/3 of his expected 2021 white wheat crop and has even pre-sold some of his 2022 crop.
“It’s more than usual, but we’ve had a pretty good price increase.” Kress said he grows about 3,000 acres (12 square kilometers) of wheat each year in southeast Idaho.
Despite the strong demand for white wheat, grain merchants and farmers don’t expect much growth in white wheat acreage this spring, given the very strong price increases for competing crops such as canola.
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