Wheat

[malleefarmer]

Anyone know the nuts and bolts of how this works.

China auctioned off 21.4 million bushels of wheat in a weekly state auction early this morning. Only 14.41% of the state offerings were purchased. Weekly state wheat purchases have largely declined since October as rising grain imports have helped offset tightening domestic supplies. State auction sales averaged about $9.75/bushel in the overnight auction

So errol 101 anyone, am i stupid in thinking china stockpiling buying and selling at a profit yes, but if there selling only 14% isnt it a losing game.

As always have trouble working out what really goes on in china

[farming101]

China's weekly grain for auction offerings have been studied by those in China and out for years. I don't claim to know all the intricacies. Also, policy change there is like stopping and turning a super tanker around.

Larger percentage sell weeks can indicate shortages, higher prices on the street or very poor quality on the street. Lower percentage sell weeks may indicate adequate street supplies and no need to tap the stockpile which can be of dubious quality. There is also the chance that some of the auctions are just paper shuffles. In October and early November there was a large increase in the percentage of auction offers purchased. News indicated that Chinese farmers were holding on to wheat thinking that higher prices were coming. So there was a short term supply shortage on the street and the buyers turned to the reserve. Another factor was the run up in corn prices to the point where wheat was being bought up for feed. Wheat street values have been flat to slightly lower since early November.

Minimum price for high quality wheat this year is set at 2320 yuan/tonne or about 9.65 US/bushel. 2240 for medium quality. You will see that most settlement prices do not stray very far from the 2320 number.
So, the reserves are basically the market in China. Farmers know that the minimum price is always available and will try and do better by marketing it themselves on the street. What happens in a year with variable quality is that good quality goes to the street and the poor quality goes to the reserves.

China has set import quotas with low tariffs at 9.6 MMT. Over that and there is a 65% tariff.

[TASFarms]

Corn in China is getting around $10 us.

[malleefarmer]

Some wheat comments a few weeks old though. FYI

https://mailchi.mp/d55cca785032/zy4y2dab92-997418 https://mailchi.mp/d55cca785032/zy4y2dab92-997418