Wheat prices will keep rising steadily in the short term

According to the monthly report of supply and demand released by the National Grain and Oil Information Center in September, the sown area of wheat in 2016 was 24.2 million hectares, the same as the previous month and an increase of 59000 hectares over 2015; the national wheat output per unit was 5.313 tons per hectare, the same as last month's forecast and 80 kg / ha less than 2015; and the national wheat output in 2016 was 128.58 million tons, the same as last month's forecast and 1.61 million tons less than 2015. In 2016, the total domestic wheat consumption was 111.01 million tons, an increase of 1.24 million tons or 1.1% over the previous year. Of this total, food consumption was 88.8 million tons, a decrease of 1.2 million tons, or 1.3 percent, compared with the previous year; feed consumption was 10 million tons, the same as last month's forecast, an increase of 3.5 million tons, or 54 percent, over the previous year; and industrial consumption was 7.5 million tons, a decrease of 1.06 million tons or 12.4 percent. The national wheat output in 2016 was 128.58 million tons, 1.61 million tons less than that of the previous year, or 1.23 percent less than that of the previous year. In 2016, the total domestic wheat consumption was 111.02 million tons, an increase of 1.23 million tons or 1.12% over the previous year. It is estimated that the balance of wheat supply and demand in 2016 will be 20.57 million tons, which is 3.14 million tons less than that of the previous year.

Wheat purchases have accelerated since August, higher than in the same period last year. Statistics from the State Grain Administration show that as of August 31, various grain enterprises in the main producing areas had purchased a total of 66.38 million tons of wheat, an increase of 6.52 million tons over the same period last year. The purchase volume in the last five days was 2.57 million tons, higher than that of 1.63 million tons in the same period last year, and the acquisition speed was faster than the same period last year. From August 1 to 31, the main producing areas purchased a total of 18.27 million tons of wheat, with an average of 3.04 million tons in five days and a maximum of 5.77 million tons in five days. The average five-day purchase volume in 2013, 14 years and 15 years is 117,129,1.83 million tons respectively, and the maximum five-day purchase volume is 223,219 and 2.5 million tons respectively, which is lower than that in the same period this year.

Recently, boosted by the Mid-Autumn Festival, the operating rate of milling enterprises has increased this week. The demand for wheat is strong, the supply of flour is sufficient, and the price of flour remains stable as a whole. The ex-factory price of special flour in Shijiazhuang, Hebei, Jinan, Shandong and Zhengzhou, Henan is 3020 yuan / ton, 3000 yuan / ton and 2980 yuan / ton, respectively, which is basically the same as last week.

With the current strong demand for flour, flour mills actively purchase wheat, the market is bullish, and the price of wheat has risen in some areas. The purchase price of wheat in Shijiazhuang area of Hebei Province is 2440 yuan / ton, and that of Dezhou area of Shandong Province is 2420 yuan / ton, both of which are 20 yuan / ton higher than yesterday. In the short term, the tight supply of high-quality grain will continue, the demand for wheat is strong, and wheat prices are expected to maintain a steady upward trend.

Strong short covering, improved prospects for wheat exports, and a boost from stronger corn and soybean markets, U.S. wheat futures closed higher on Sept. 7, with CBOT12 closing up 4.25 cents per bushel at 402.75 cents per bushel, KCBT12 at about 0.75 cents per bushel and MGE12 at about 2 cents at 488 cents per bushel.