Voluntary Report - public distribution

**Date:** 4/26/2005

**GAIN Report Number:** CH5036

CH5036

**China, Peoples Republic of**

**Grain and Feed**

**Update**

**2005**

**Approved by:**

![](media/image1.wmf)Maurice House

U.S. Embassy Beijing, Office of Agricultural Affairs

**Prepared by:**

Ralph Gifford and Jiang Junyang

**Report Highlights:**

Post\'s forecast of China's wheat imports for MY05/06 is revised to 4
MMT, 2 MMT lower than post\'s February forecast, because of anticipated
increase in wheat output in 2005. General conditions for winter wheat
crop are normal by April. The government's favorable policies will
remain in place in 2005 with some programs becoming more beneficial for
grain production in 2005 and years to come. Post's estimate of China's
corn exports for MY04/05 is 6 mmt, unchanged from the previous update.

Includes PSD Changes: Yes

Includes Trade Matrix: No

Unscheduled Report

Beijing \[CH1\]

\[CH\]

**WHEAT**

Post\'s forecast of China's wheat imports for MY05/06 is revised to 4
MMT, 2 MMT lower than post\'s February forecast, because of anticipated
increase in wheat output in 2005. General conditions for the winter
wheat crop are normal as of April.

According to an April survey by China's National Statistical Bureau,
grain harvested area in calendar year 2005 will reach 1.558 billion mu (
15Mu=1Ha), 2.3 percent above last year. So-called "summer grain"
harvested area (winter wheat, barley, tubers and pulses and some corn to
be harvested in summer) will rise 4.8 percent to 395 million mu, ending
a seven straight year decline. Winter wheat acreage accounts for 80
percent of China's total summer grain harvest. Based on the NSB survey,
post keeps its forecast on total wheat acreage at 22.78 million ha in
MY05/06, unchanged from the previous estimate.

Currently, winter wheat crop conditions are generally normal and
moisture level is adequate in major winter wheat regions, according to
Ministry of Agriculture. MoA sources said that a more accurate estimate
on crop conditions could be available by mid May, a critical growth
period for winter wheat before the June harvest.

Government polices to encourage grain production introduced in 2004,
including direct payments, agricultural tax removal, floor price (on
rice only), subsidy on seed and machinery, will remain in place in 2005;
some programs will receive more funding. For example, according to MoA,
100 million mu of wheat area (or near 30 percent of China's total wheat
area) will receive RMB 10/mu subsidy for quality seed in 2005. The seed
subsidy goes to government designated seed companies, who then are
supposed to sell the seed to farmers at discount price. In 2004, only 10
million mu of wheat was covered by the program. This subsidy might not
contribute much to farmer's net income. If well implemented, however, it
could play a role in improving the wheat quality in China. According to
the program, the subsidy will focus on either high gluten or low gluten
varieties.

A survey by NSB shows that in 2004, wheat farmers saw the highest annual
increase in net income from wheat comparing with rice, corn and
soybeans.

+----------------------+-----------------+-----+-----+-----+--------+
| #####                |                 |     |     |     |        |
| # Growth in Average  |                 |     |     |     |        |
| Net Income from Grai |                 |     |     |     |        |
| n Production in 2004 |                 |     |     |     |        |
+----------------------+-----------------+-----+-----+-----+--------+
| Excludes labor cost  | Average for     | Wh  | C   | R   | Soy    |
|                      | Grains          | eat | orn | ice | Bean   |
+----------------------+-----------------+-----+-----+-----+--------+
| Net Income in RMB/Mu | 270.1           | 19  | 32  | 33  | 229.2  |
|                      |                 | 9.1 | 1.6 | 0.6 |        |
+----------------------+-----------------+-----+-----+-----+--------+
| Increase over 2003   | 42%             | 65  | 55  | 53  | 8.0%   |
|                      |                 | .4% | .2% | .4% |        |
+----------------------+-----------------+-----+-----+-----+--------+
|                      |                 |     |     |     |        |
+----------------------+-----------------+-----+-----+-----+--------+
| Source: National     |                 |     |     |     |        |
| Statistical Bureau   |                 |     |     |     |        |
+----------------------+-----------------+-----+-----+-----+--------+

Industry sources estimate that wheat stocks are still sufficient for the
current marketing year. In late April, the State Administration of Grain
issued a notice cautioning the state grain companies to slow down their
wheat rotation to prevent the wheat price from falling and hurting the
farmers. Wheat price has been flat in recent months.

![](media/image2.wmf)Source: China Grain & Oil Information Center

**CORN**

Post's estimate of China's corn exports for MY04/05 is 6 mmt, unchanged
from previous update. Customs data shows that China exported 1.1 MMT of
corn in March. This was a surprise, given China's current loading
capacity. Trade sources believe, however, that some of the volume was
actually lifted in February, but not recorded by the customs system
until later because of the Chinese New Year holiday. Trade sources
report that the shipping plans are still on track despite some quality
complaints by the importers, such as broken kernels and foreign matter.

  ------------ ----------- ----------- ---------- --------- -------- --------
  **China:                                                           
  Corn Exports                                                       
  by Month                                                           
  Oct.-March                                                         
  MY04/05 (in                                                        
  1,000 MT)**                                                        

  Oct 2004     Nov 2004    Dec 2004    Jan 2005   Feb 2005  Mar 2005 Total

  49           43          343         485        120       1,104    2,144

  China                                                              
  Customs, HS                                                        
  Codes:                                                             
  100590,                                                            
  100510                                                             
  ------------ ----------- ----------- ---------- --------- -------- --------

# PS & D tables 

+-----------------+------+------+------+------+------+------+-------+
| **Country**     | ##   |      |      |      |      |      |       |
|                 | #### |      |      |      |      |      |       |
|                 | # Ch |      |      |      |      |      |       |
|                 | ina, |      |      |      |      |      |       |
|                 |  Peo |      |      |      |      |      |       |
|                 | ples |      |      |      |      |      |       |
|                 |  Rep |      |      |      |      |      |       |
|                 | ubli |      |      |      |      |      |       |
|                 | c of |      |      |      |      |      |       |
+-----------------+------+------+------+------+------+------+-------+
| **Commodity**   | W    |      |      |      | (    |      |       |
|                 | heat |      |      |      | 1000 |      |       |
|                 |      |      |      |      | HA)( |      |       |
|                 |      |      |      |      | 1000 |      |       |
|                 |      |      |      |      | MT)  |      |       |
+-----------------+------+------+------+------+------+------+-------+
|                 | **20 | **R  | **20 | **Es | **20 | **Fo | **    |
|                 | 03** | evis | 04** | tima | 05** | reca | UOM** |
|                 |      | ed** |      | te** |      | st** |       |
+-----------------+------+------+------+------+------+------+-------+
|                 | **   | **   | **   | **   | **   | **   |       |
|                 | USDA | Post | USDA | Post | USDA | Post |       |
|                 | Offi | Esti | Offi | Esti | Offi | Esti |       |
|                 | cial | mate | cial | mate | cial | mate |       |
|                 | \    | \    | \    | \    | \    | \    |       |
|                 | [Old | [New | [Old | [New | [Old | [New |       |
|                 | \]** | \]** | \]** | \]** | \]** | \]** |       |
+-----------------+------+------+------+------+------+------+-------+
| ######## Ma     |      | 07-  |      | 07-  |      | 07-  | MM    |
| rket Year Begin |      | 2003 |      | 2004 |      | 2005 | /YYYY |
+-----------------+------+------+------+------+------+------+-------+
| ########        | 2    | 2    | 2    | 2    | 0    | 2    | (1000 |
|  Area Harvested | 2000 | 2000 | 1750 | 1750 |      | 2780 | HA)   |
+-----------------+------+------+------+------+------+------+-------+
| **Beginning     | 6    | 6    | 4    | 4    | 3    | 4    | (1000 |
| Stocks**        | 0378 | 0378 | 3293 | 4943 | 8793 | 1443 | MT)   |
+-----------------+------+------+------+------+------+------+-------+
| **Production**  | 8    | 8    | 9    | 9    | 0    | 9    | (1000 |
|                 | 6490 | 6490 | 1000 | 1000 |      | 2000 | MT)   |
+-----------------+------+------+------+------+------+------+-------+
| **TOTAL Mkt.    | 3749 | 3749 | 7500 | 7500 | 0    | 4000 | (1000 |
| Yr. Imports**   |      |      |      |      |      |      | MT)   |
+-----------------+------+------+------+------+------+------+-------+
| **Jul-Jun       | 3749 | 3749 | 7500 | 7500 | 0    | 4000 | (1000 |
| Imports**       |      |      |      |      |      |      | MT)   |
+-----------------+------+------+------+------+------+------+-------+
| **Jul-Jun       | 1466 | 1466 | 0    | 2500 | 0    | 1500 | (1000 |
| Import U.S.**   |      |      |      |      |      |      | MT)   |
+-----------------+------+------+------+------+------+------+-------+
| **TOTAL         | 15   | 15   | 14   | 14   | 3    | 13   | (1000 |
| SUPPLY**        | 0617 | 0617 | 1793 | 3443 | 8793 | 7443 | MT)   |
+-----------------+------+------+------+------+------+------+-------+
| **TOTAL Mkt.    | 2824 | 2824 | 1000 | 700  | 0    | 500  | (1000 |
| Yr. Exports**   |      |      |      |      |      |      | MT)   |
+-----------------+------+------+------+------+------+------+-------+
| **Jul-Jun       | 2824 | 2824 | 1000 | 700  | 0    | 500  | (1000 |
| Exports**       |      |      |      |      |      |      | MT)   |
+-----------------+------+------+------+------+------+------+-------+
| **Feed Dom.     | 6000 | 4000 | 4000 | 2500 | 0    | 2000 | (1000 |
| Consumption**   |      |      |      |      |      |      | MT)   |
+-----------------+------+------+------+------+------+------+-------+
| **TOTAL Dom.    | 10   | 10   | 10   | 10   | 0    | 10   | (1000 |
| Consumption**   | 4500 | 2850 | 2000 | 1300 |      | 0700 | MT)   |
+-----------------+------+------+------+------+------+------+-------+
| **Ending        | 4    | 4    | 3    | 4    | 0    | 3    | (1000 |
| Stocks**        | 3293 | 4943 | 8793 | 1443 |      | 6243 | MT)   |
+-----------------+------+------+------+------+------+------+-------+
| **TOTAL         | 15   | 15   | 14   | 14   | 0    | 13   | (1000 |
| DISTRIBUTION**  | 0617 | 0617 | 1793 | 3443 |      | 7443 | MT)   |
+-----------------+------+------+------+------+------+------+-------+

## Average corn wholesale price in production region and consuming region

  ------------------------- ------------------------ ---------------------
  **China: Average Corn                              
  Wholesale Prices**                                 

  (Renminbi Per Metric Ton,                          
  USD 1.00 = RMB 8.27)                               

                            Producing Region/1       Consuming Region/2

  January (2004)            1,178                    1,355

  February                  1,153                    1,318

  March                     1,185                    1,355

  April                     1,270                    1,415

  May                       1,290                    1,408

  June                      1,293                    1,413

  July                      1,315                    1,440

  August                    1,325                    1,460

  September                 1,290                    1,435

  October                   1,200                    1,385

  November                  1,140                    1,305

  December                  1,120                    1,300

  January (2005)            1,113                    1,275

  February                  1,088                    1,243

  March                     1,125                    1273

  April                     1,148                    1290

  /1 Heilongjiang, Jilin,                            
  Shandong, Henan                                    

  /2 Tianjin, Fujian,                                
  Jiangxi, Hubei                                     

  Source: China National                             
  Grain and Oils                                     
  Information Center                                 
  ------------------------- ------------------------ ---------------------

## Average Rice Retail price in production region and consuming region

  ------------------------ ------------------------ ---------------------
  **China: Average Retail                           
  Rice Prices**                                     

  (Renminbi Per Metric                              
  Ton, USD 1.00 = RMB                               
  8.27)                                             

                           Milled Indica            Milled Indica

  National Average         Grade 1                  Grade 1

                           Producing Region/1       Consuming Region/2

  January (2004)           1,990                    1,900

  February                 2,100                    2,060

  March                    2,490                    2,240

  April                    2,450                    2,220

  May                      2,660                    2,570

  June                     2,650                    2,540

  July                     2,590                    2,520

  August                   2,480                    2,510

  September                2,470                    2,490

  October                  2,440                    2,460

  November                 2,390                    2,390

  December                 2,380                    2,450

  January (2005)           2,380                    2,420

  February                 2,380                    2,410

  March                    2,360                    2,430

  April                    2,330                    2,320

  /1 Zhejiang,Anhui,Fujian                          

  /2 Guangdong, Guangxi                             

  Source: China National                            
  Grain and Oils                                    
  Information Center                                
  ------------------------ ------------------------ ---------------------

# Average wheat wholesale price in production region and consuming region

+-------------------------+----------------------+--------------------+
| **China: Average        |                      |                    |
| Wheat(Grade2) Wholesale |                      |                    |
| Price**                 |                      |                    |
+-------------------------+----------------------+--------------------+
| (Renminbi Per Metric    |                      |                    |
| Ton, USD 1.00 = RMB     |                      |                    |
| 8.27)                   |                      |                    |
+-------------------------+----------------------+--------------------+
| National Average        | Producing Region/1   | Consuming Region/2 |
+-------------------------+----------------------+--------------------+
| January (2004)          | 1,410                | 1,540              |
+-------------------------+----------------------+--------------------+
| February                | 1,440                | 1,550              |
+-------------------------+----------------------+--------------------+
| March                   | 1,640                | 1,650              |
+-------------------------+----------------------+--------------------+
| April                   | 1,630                | 1,670              |
+-------------------------+----------------------+--------------------+
| May                     | 1,610                | 1,610              |
+-------------------------+----------------------+--------------------+
| June                    | 1,580                | 1,610              |
+-------------------------+----------------------+--------------------+
| July                    | 1,560                | 1,610              |
+-------------------------+----------------------+--------------------+
| August                  | 1,600                | 1,640              |
+-------------------------+----------------------+--------------------+
| September               | 1,630                | 1,690              |
+-------------------------+----------------------+--------------------+
| October                 | 1,610                | 1,665              |
+-------------------------+----------------------+--------------------+
| November                | 1,635                | 1,675              |
+-------------------------+----------------------+--------------------+
| December                | 1,610                | 1,685              |
+-------------------------+----------------------+--------------------+
| January(2005)           | 1,620                | 1,705              |
+-------------------------+----------------------+--------------------+
| February                | 1,620                | 1,705              |
+-------------------------+----------------------+--------------------+
| March                   | 1,620                | 1,705              |
+-------------------------+----------------------+--------------------+
| April                   | 1,620                | 1,705              |
+-------------------------+----------------------+--------------------+
| /1 Heilongjiang,        |                      |                    |
| Shandong, Henan,Shanxi  |                      |                    |
+-------------------------+----------------------+--------------------+
| /2 Beijing,             |                      |                    |
| Tianjin,Fujian          |                      |                    |
+-------------------------+----------------------+--------------------+
| Source: China National  |                      |                    |
| Grain and Oils          |                      |                    |
| Information Center      |                      |                    |
|                         |                      |                    |
|                         |                      |                    |
+-------------------------+----------------------+--------------------+