China initiates first minimum-price wheat auction for 2022 amid price surge
China is to have its first auction of state wheat reserves in 2022 next Wednesday (January 5) in an attempt to combat a spiking domestic wheat price as demand rose sharply in 2021.
Half of a million tons of wheat reserves of 2014-2020 harvests will be offered in auctions across five Chinese provinces including Henan, Hebei and Anhui. The floor price has been set at 2,000-2,350 yuan/ton (314-369 USD/ton).
The average price level in 2022 is lower than 2,175 yuan/ton (341 USD/ton) in 2019.
This will be the first minimum-price wheat auction since May 2021, according to China’s National Trade Center.
The announcement came at a time when domestic wheat price in China has strengthened to a multi-year high. According to data from the Ministry of Agriculture and Rural Affairs, cash wheat price averaged 2,840 yuan/ton (446 USD/ton) in December this year, the highest level in two years.
Meanwhile, wheat futures in Zhengzhou Commodity Exchange (CZCE) also had bumper gains in the past two years and is currently hovering at 2,942 yuan/ton (462 USD/ton), the highest level since May 2017.
Wheat prices in China has been on an upward trajectory since 2019 as domestic demand continued to grow despite a steady supply. China’s wheat demand started to surpass domestic in 2019 with the gap widening to more than 12 million tons in 2021.
Much of the demand growth was said to be prompted by a broader acceptance of wheat-based food and western cuisine within the Chinese population, as well as a strong substitute of corn by wheat in animal feed use due to large price difference.
China’s wheat demand in food use has grown by more than 15% in the past decade and that in feed use has surged by nearly 50% during the same period. The growth rate has been particularly staggering in the past two years.
Despite the strong wheat price in China, the government has maintained its state-backed wheat procurement target for 2022 at 37 million tons, unchanged from the 2021 target.
Corn sales rise for three consecutive weeks, soybean sales rebound
Company purchases of 2021 harvests of corn and soybeans from farmers in China continued to rise during the week ending December 25, official government data showed.
Corn sales jumped to more than 10 million tons for the week, up three consecutive weeks. The volume is nearly 21% higher from the previous week.
So far in 2021, cumulative corn sales have reached more than 44.7 million tons.
Soybean sales during the week also rebounded more than 21% on the week to 170,000 tons, after having fallen for the past three weeks.
The overall sales this year have hit 1.44 million tons.
Mislabelled ingredients draw increasing media coverage
Quick frozen products have been getting a lot of attention recently, with several mainstream media outlets covering the ingredients of these products.
Last week, Beijing News had an investigation about how products labelled with names such as “Beef Dumplings” might also contain chicken or pork.
Out of ten products labelled “beef”, eight also contained pork. Out of 30 labelled “pork”, ten contained chicken as well.
Another article on Wednesday unveiled that meatballs used in popular hotpot restaurants are sold at a cheaper price than the meat. For instance, beef meatballs are sold for 18 yuan/kg, while beef is priced at 60 yuan/kg.
The meatballs commonly contain other fillers including starches and other additives, and this complies with food safety and labelling regulations.
Overall, this is not unusual. Companies will use other meats and additives based on considerations such as cost, flavor, and texture.
However, it is notable because of the rise of quick, frozen at-home meals in China and consumers’ increasing awareness of ingredients and health considerations.