Chinas wheat harvest will slip just over 1 percent from last years bumper crop after light damage from a drought, while a 10 percent rise in rapeseed output may be partly offset by lower soyabean planting, the governments main grains agency said in its first forecasts for this year.
The new forecasts for the worlds biggest producer of the grain support earlier assessments that Februarys drought, billed as the worst in decades in Chinas major wheat areas, would do minimal harm, reducing the risk the country would have to boost already hefty domestic supplies with imports.
Estimates for oilseed production, however, suggested that import demand from the worlds biggest vegetable oil buyer could be dimmed later this year, as the country has already made bumper imports in the first half. The agency predicted a 10 percent rise in rapeseed output this year at 13 million tonnes, and industry experts said the supply was set to outstrip demand. "It is no doubt that supplies are larger than demand," said Sun Zhou, general manager with COFCO Xiangrui Oil and Grains Industries Co Ltd, the countrys largest rapeseed crusher.
"Job losses of 20 million migrant farmers or even more could lead to lower demand from restaurants." Wheat production is likely to fall 1.3 percent in 2009, to 111 million tonnes, because of the drought damage and could reduce yields of winter wheat, the agency, the China National Grain and Oils Information Centre, (CNGOIC), said. Expectations of minor drought damage were in line with comments by government grain and agricultural officials.
China was unlikely to need significant wheat imports this year as the crop had largely escaped damage from the drought, the head of the State Grain Administration told reporters last week. Ample government reserves have also supported domestic supplies.
Chinas wheat stocks made up nearly half its total grain reserves, at between 150 million and 200 million tonnes last year, said Bao Kexin, head of state grain buying agency Sinograin. Winter wheat, to be harvested in May, accounts for more than 90 percent of the countrys total wheat harvest.
HIGHER RAPESEED: Rapeseed output was seen to increase by 10.2 percent to 13 million tonnes in 2009 as farmers increased areas under cultivation, the centre said, since the crop had escaped the drought. The higher output expectations, coupled with large imports earlier in the year, as well as a fall-off in demand, could pressure domestic prices and lead to smaller imports in the second half of the year, industry officials said.
COFCOs Sun expected a larger increase, of 18 to 20 percent, for this years rapeseed harvest, or about 11.8 million tonnes. His figure for last years crop was smaller than the centres. Beijings stockpiling of rapeseed last year has driven up domestic prices beyond imports.
Traders pegged imports in the year ending May at more than 2 million tonnes, double the previous year. Sinograins Bao said the company had turned its rapeseed reserves to rapeseed oil, which was equivalent to about 540,000 tonnes. Traders also expected Sinograin to release some of the reserves in the second half of the year.
The centre expected a lower 2009 output of corn and soyabeans, citing a survey on planting plans by some farmers. Farmers are about to plant corn and soyabean next month, but lower prices, pressured by a record grain harvest last year, may lead to smaller planting acreages. "The five-year consecutive bumper harvests have given a higher basis for this year and it is more difficult for the country to maintain e said.
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