China's recent foreign wheat orders may be the tip of the iceberg for grain imports in years to come as the country is unlikely to produce enough itself and stocks have been reduced, traders and analysts said on Tuesday.
The government said that China's total 2003 grains output was 430.6 million tonnes, the lowest since 1990 and 5.8 percent less than 2002's harvest of 457 million tonnes.
Beijing has set a target for 2004 of 455 million tonnes. But the traders and analysts said it might need to import more than five million tonnes of wheat from the second half after years of meagre crops.
It may also begin importing corn late in the year. Despite a recent government campaign to raise grain output, farmers would rather plant cotton or soyabeans that have seen bigger price rises in recent months.
Water shortages pose another major challenge. "I really worry about the next crop year," said a senior trader at an international house based in Beijing. "I believe China still has sufficient inventories for this year. But things look different for the next year."
High cotton prices, coupled with unfavourable weather, have already shaved about five percent off acreages for the next winter wheat crop, which accounts for 90 percent of the country's total wheat output, the traders and analysts said.
Some analysts expect Chinese cotton acreages to jump as much as 20 percent this year after a similar increase in 2003.
After large grain exports in the past few years, China has now emerged as a big buyer of wheat, placing orders for one million tonnes from Australia, 500,000 from Canada and about 1.5 million tonnes from the United States.
The traders and analysts said the deals, mostly concluded by the state-owned trader China National Cereals, Oils & Foodstuffs Import & Export Corp (COFCO), appeared rather political, aimed at helping reduce trade imbalances with the United States.
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