Wheat cargoes set sail for China, prices stay firm

China has begun shipping wheat cargoes from Canada, Australia and the United States, as the country grapples with dwindling harvests and stocks, traders said on Wednesday.
China, the world's top wheat consumer, has embarked on a global wheat shopping spree, with imports nearly quadrupling to about 150,000 tonnes over the year to January and February, the official China Securities Journal reported, quoting customs figures.
"China's wheat output and stocks have been falling in the past few years and it's possible that they will import more in the coming year to ensure grain security," said a trader with a global trading firm in China.
Four vessels have arrived or are due to arrive from Canada and an Australian cargo is expected at the end of March. Another two from the United States are about to set sail, traders said.
Chinese wheat prices are at eight-year peaks and are set to climb further in the next few months with the upcoming winter wheat crop expected to be the smallest in about 20 years.
Domestic wheat prices rose by 0.7 percent in February from January, and were almost 20 percent higher than a year earlier, the State Statistical Bureau said.
That is welcome news for farmers, who have suffered from years of falling grain prices, but Beijing faces a balancing act of raising rural incomes while guarding against inflation.
"The price rise is good news for farmers. The government would want to keep prices at a certain level and I don't think the imports will put huge pressure on domestic prices," the trader said.
High-quality wheat prices now stood at 1,950 yuan ($236) a tonne in Guangdong province, a key consuming region, and 1,700 yuan in Shandong, the top wheat growing province, traders said.
Chinese Premier Wen Jiabao plans to cut taxes and increase subsidies in rural areas - home to 800 million of China's 1.3 billion people - because their incomes have grown more slowly than those of people in wealthy coastal regions.
This year's winter wheat output is seen at about 78 million tonnes, the lowest in about 20 years, down from 80.6 million tonnes last winter, the state-backed National Grain and Oils Information Centre said.