What is in this article?:
- Chinese crop shifts may impact global wheat market
- Soybean production down significantly
- China is the world’s largest producer and consumer of wheat, yet it currently plays a very minimal role in the world market. Any change would have a significant impact on the world supply and demand picture.
To the wheat industry, China is like an elephant in the corner.
Even though it is sitting silently, it takes up the majority of the room and you cannot ignore what might happen if it does something unexpected.
China is the world’s largest producer and consumer of wheat, yet it currently plays a very minimal role in the world market. Any change would have a significant impact on the world supply and demand picture.
Current trends in China’s crop situation indicate there is growing internal competition for acres among the commodities. That begs the question: How will China’s internal competition impact the world wheat outlook?
As in the United States and many other countries, corn is significantly shaping China’s agricultural landscape. According to the U.S. Department of Agriculture (USDA), total Chinese corn consumption surpassed total wheat consumption in 1997/98 and surpassed total rice consumption in 2004/05. In the last 10 years, Chinese corn consumption increased by 57 percent while wheat and rice consumption increased 17 and 8 percent, respectively.
China’s harvested corn acres and yields are increasing to meet this new and growing demand. According to USDA, China’s corn planted area increased 43 percent since 2003/04 to an estimated 34.3 million hectares in 2012/13.
Wheat planted area increased just 10 percent during the same period to 24.3 million hectares but has remained virtually unchanged for the last seven years and fell far below the peak of more than 30.0 million hectares in the early 1990s.
If China continues to increase corn area at such a fast pace, will it be to the detriment of other commodities?
Over the past decade, total harvested area of all field crops increased; therefore, the higher corn area did not significantly siphon land from other crops. However, part of the increase is a result of double-cropping instead of expanding agricultural acres. In fact, urbanization in many regions threatens traditional agricultural land and will be an important factor in the competition for planted area going forward.
It is safe to assume there is a finite amount of viable agricultural land and at some point an increase in one crop will lead to a direct decrease in another.