Forecast of wheat prices before the Spring Festival: wheat prices are stable, flour and bran will follow the trend.

In November, wheat prices rose steadily, and the average purchase price of standard quality wheat in the main domestic producing areas was basically 1.27 yuan / jin or more. The prices of flour and wheat bran also rose significantly, and the profit situation of processing enterprises was greatly improved. It is expected that before the Spring Festival, wheat prices in the main domestic producing areas are still high and firm, and may rise slightly in some areas.

The supply of grain in circulation is too tight to support the wheat market.

In November, domestic wheat supply and demand was still tight, and the market in the main producing areas maintained a high fluctuation trend.

According to market information, at the end of the month, the purchase price of standard quality wheat (about 10% of imperfect grains) in the north of the Yellow River was maintained at 1.291.33 yuan per jin; the purchase price of wheat in central and eastern Henan, northern Jiangsu and northern Anhui was 1.251.28 yuan per jin; the purchase price of common wheat (imperfect grains 15% or more) in other areas was 1.15 yuan and 1.22 yuan per jin.

As the state successively put in 2015 wheat to support the market in Shandong, Hebei, and Jiangsu, to a certain extent, it increased the market supply and restrained the market rise, making the market strong and stable in the first and middle of November; however, the heavy snow in North China in the last ten days hindered transportation, and the procurement of raw grain and the shipment of grain products by enterprises were affected, resulting in a rise in the market.

The cost of raw grain drives flour and bran higher.

Affected by the higher purchase price of raw grain, the ex-factory price of flour is also rising rapidly. According to market information, at the end of November, the mainstream ex-factory price of 30 flour from processing enterprises in the main producing areas was 1.65 million 1.70 yuan per jin, an increase of 0.03 million yuan per jin compared with the previous month, while the ex-factory price of 60 powder was mostly between 1.55 yuan and 1.60 yuan per jin, up by 0.02 yuan and 0.04 yuan per jin.

Due to the steady increase in demand and tight market supply, the wheat bran market has improved steadily. By the end of November, the mainstream quotations for wheat bran in the main producing areas were mostly between 0.78 yuan and 0.83 yuan per jin, and large pieces of bran had risen to about 0.90 yuan per jin. High raw grain prices lead to underemployment, corn market slowly rebounding, stable feed consumption demand, tight freight and other factors jointly push up the trend of wheat bran.

Improve market supply and put in new grain in three provinces

In November, wheat was put into storage five times, with an average weekly output of 2.71 million tons, an increase of 226000 tons over the previous month; the average weekly turnover was 317000 tons, an increase of 271000 tons compared with the previous month; and the average transaction price was 2487.49 yuan / ton, down 17.75 yuan / ton from the previous month. Average weekly turnover rose sharply to the highest level since April 2014.

At present, the factory price of wheat in North China is basically about 1.29 yuan / jin, while that of medium-quality wheat in other major producing areas (about 15% of imperfect grains) is also about 1.25 yuan / jin. Taking into account the procurement cost and convenience, temporary storage transaction has become the main channel for enterprises to obtain raw grain.

The reserve price of wheat in 2015 remained unchanged at the 2014 level. For Hebei and Shandong, which have relatively tight supply of raw grain, and Jiangsu, which generally suffers from meteorological disasters, the release of wheat in 2015 is undoubtedly a "timely rain". It not only alleviates the demand for raw grain in the local market, but also alleviates the pressure on the surrounding markets.

Low shock on the outer disk of total import growth

Customs data show that China imported 263000 tons of wheat in October, down 53000 tons from the same period last year and 169000 tons from the previous month. The average import price was 229.55 US dollars / ton, down 69.89 US dollars / ton from the same period last year and 6.98 US dollars / ton from the previous month. However, the cumulative import volume of wheat from January to October reached 3.123 million tons, exceeding the total import volume of 2.972 million tons in 2014 and 2.973 million tons in 2015. The average import price also decreased significantly. As of October, the average price of imported wheat in 2016 was 239.25 US dollars / tonne, much lower than last year's 299.09 US dollars / ton and 2014 323.87 US dollars / ton.

The strong rise of the US dollar index and the continuous depreciation of the RMB exchange rate against the US dollar will not help enterprises to control the purchasing cost of imported wheat, and it is less likely to increase the volume of wheat imports in the later stage.

Loose supply and demand put pressure on the CBOT wheat market, with the US wheat index falling as low as 409.4 in the first half of November. Affected by the upward correction of the US dollar, the reduction of wheat acreage in the United States and the dry climate in the Great Plains of the United States, the US wheat market rebounded at a low level, but it was difficult to get fundamental support after reaching 431 points.

Single consumption in supply channels is steadily increasing

In December, the trend of the wheat market will mainly refer to the supply and demand pattern of the main domestic producing areas. From the supply point of view, the main supply channel in the current market should be the temporary storage of wheat. According to a rough estimate, the current stock of wheat in storage should not be less than 65 million tons, of which, except for the untouched wheat grains collected in 2016, the remaining 37 million tons of wheat in 2014 and 2015 are sufficient for current market consumption demand.

At the same time, under the support of the spot market, the possibility of lowering the reserve wheat trading floor price is relatively small, which will be conducive to the inventory structure adjustment of the stock wheat. Other supply channels, such as grain storage in the hands of farmers and the inventory of trade-oriented enterprises are very limited, so it is difficult to improve market demand.

At the consumption level, some recent macro factors promote the gradual expansion of group flour consumption, the purchasing attitude of downstream flour traders is positive, and the profits of processing enterprises are improved, further boosting the enthusiasm of processing enterprises to start work. The cost of corn entry in Northeast China increased, the price difference between feed wheat and corn narrowed, the total import of feed substitutes decreased compared with the same period last year, and wheat feed consumption was supported.

According to a comprehensive analysis, before the Spring Festival, wheat will be in a market environment of "single supply channel, limited supply, solid basic consumption and increasing incremental consumption", and the possibility of a significant decline in the market is relatively small; it is not ruled out that affected by rain and snow, transportation will be blocked and there will be short-term price fluctuations, but there are not many opportunities for a sustained surge in the later period. It is estimated that before the Spring Festival, the entry price of medium-quality wheat (about 10% of imperfect grains) in the north of the Yellow River may be between 1.30 yuan and 1.35 yuan per jin, and that of wheat in other areas (10% to 15% of imperfect grains) may be between 1.25 yuan and 1.30 yuan per jin.