May rains in China could wash away up to 20% of the winter wheat crop

China's intentions to collect a record wheat harvest were destroyed by heavy rains in May, which flooded wheat fields in the main agrarian provinces of the country just before the start of harvesting. The extent of the damage has not yet been determined, but according to preliminary data, up to 20% of wheat crops were damaged and the quality of the grain significantly deteriorated.

China is the world's largest producer and consumer of wheat. According to the USDA forecast, in FY 2023/24 it was supposed to harvest 140 million tons of wheat (17.7% of world production) and consume 149 million tons (18.8%).

A reduction in wheat production will lead to increased imports of food wheat, while domestic grain will go to animal feed at a significant discount and replace imported corn.

Henan Province, which is the largest producer of wheat in the PRC, was supposed to collect 38 million tons of grain (27% of the national harvest), but only 25% of the crops were threshed before the onset of the rains. The downpours that took place in the region from May 25 to 29 became the heaviest since 1961. But they affected not only Henan province, but also most wheat-growing areas in central and southern China, although to a lesser extent.

According to experts' estimates, up to 30 million tons of wheat from the expected harvest of 137 million tons were damaged, of which 10 million tons were lost, and 20 million tons sprouted and became unfit for human consumption. In some areas, the grain is infected with fusarium, so it cannot be used even for animal feed.

The Meteorological Administration of the People's Republic of China believes that extreme weather will continue in June, and the amount of precipitation and temperatures in most regions will exceed the norm, which will damage crops.

The Chinese MSG called on the authorities to mobilize brigades to speed up the drainage of water from the fields so that harvesters could enter them, and to deploy a network of grain dryers.

Imports of wheat to the PRC in the first 4 months of 2023 grew by 80% against the background of a decrease in world prices compared to domestic prices and amounted to 6 million tons or 60% of the total volume of imports in 2021-22. Only in April did wheat imports grow compared to in April 2022 by 141% to 4.7 million tons, while corn imports fell by 54.6% to 1 million tons. Almost 60% of purchased in January - April wheat was imported from Australia, 19% - from Canada, 13% - from France and 8% - from the USA.

The increase in the import of feed and food wheat from Australia is due to the intentions of Chinese processors to replace domestic wheat with imported wheat in feed rations, however, the loss of part of the harvest will force them to activate the purchase of food grain in particular.

According to the US MSG, in 2022/23 FY China became the largest world importer of wheat, which increased purchases compared to 2021/22 FY by 41% from 9.568 to 13.5 million tons. At the same time, in 2021/22 FY Egypt was the largest importer (11.259 million tons) and Indonesia (11.256 million tons), and China took third place.

According to the USDA forecast, in FY 2023/24, China will return to third place with imports of 10.5 million tons, but this indicator may change against the background of significant crop losses.