Spring wheat subsidy; Shrinking edible oil margins; Cold weahther sweep

China considers subsidizing spring wheat planting due to winter crop delays

China’s Ministry of Agriculture and Rural Affairs are looking to give more subsidies to farmers for the upcoming spring wheat planting to ease the supply pressure caused by winter planting delays.

The delayed planting of winter wheat in China largely caused by the massive flooding in the city of Zhengzhou last summer is deemed as “the biggest difficulty” for wheat planting in spring 2022.

Therefore, the government is planning to grant more subsidies to support farmers’ financing. The subsidy is likely in a form of direct cash payment to farmers.

Cash subsidies for wheat planting were around 60 yuan/mu (US$142/hectare) in the past.

Wilmar edible oil business profit plunges amid rising costs

Arowana, a subsidiary of Wilmar and the market share leader in edible oils in China, said its 2021 net profit was down 31% year on year.

A large increase in raw material prices seriously hurt margins, the company noted. Despite the company having raised prices, it was not enough to fully offset the higher input costs.

Many companies have raised prices in 2022 including fast food chains and makers of instant noodles and condiments. Many of these product categories are intensely competitive and companies are generally reluctant to pass on rising costs to consumers.

Arowana also noted weaker consumption among the sales of their mid-to-high end retail offerings.

Cold weather sweeps across China wheat planting area

Temperatures across China were colder than average over the past 10 days with many areas well below average. Most of the northern wheat belt was 4-8 degrees Celsius below average, however much of this area still has good snow cover so freeze damage to wheat crops are expected to be minimal.

The southern wheat areas had lower temperatures which is slowing the crop development. Much of the winter wheat crop planting was delayed last autumn due to weather issues including the flooding in Zhengzhou, so additional delays in crop development puts some areas significantly behind schedule.

The weather service index tracking the suitability of conditions for winter wheat conditions was mixed but generally improved over the past week.