With adverse weather conditions in U.S for over six months and expected weather woes in major wheat producing countries, the price of wheat is anticipated to surge by around 5 percent by the mid of 2013. Evaluating Chinese import data for wheat, with tripling buy-ins as revealed by a source during the year-on-year months of 2012, the buying pressure from China might add pressure on world wheat market. The rise in Chinese import is reported to have increased to around 200 percent, compared to last year’s figure.

Since the year 2004-05, China has not emerged as a major wheat importer, but considering the forecasted figures of 3.6 million tons of wheat import for year 2012-13, the highest in eight years, the world market (including major producers and consumers) ought to look at minutely to prevent from price trends and supply constraints ahead.

The surge in Chinese wheat import is attributed towards significant fall in production of wheat in China amid weak harvest as diseases affected the crop. The wheat production in China this year is believed to have contributed to only about 106 to 118 million tons to the local market. As per Chinese authorities, the outcome is far worse than expected in terms of production.

Reduction in wheat demand by U.S and plentiful supply may have put bearish pressure on wheat futures at international market, forecasted adverse weather conditions for the coming years in wheat producing nations is expected to surge wheat prices in the forthcoming days amid production plunge and short supply. As per specialists, as the fertile capacity of wheat producing lands are deteriorating with every passing day, prices of wheat are expected to rise by around 195 percent by the year 2030. This suggests that the long term perspective for wheat prices can be taken as bullish. Although the long-tem view for wheat is buoyant and obviously long run traders can count on long position, it is up to traders to cash on short run bearish wheat market via temporary short position considering market ‘Bear’ time and again. 

Note: This blog is just an expression of the author’s opinion and cannot be deemed responsible for any losses incurred.