Heavy snow in China’s wheat belt in the north is conducive for the winter crop, particularly to help ease dry weather earlier, but it has delayed corn transport out of the areas, worsening already tight supplies in the south.

As much as 55 cm of snow fell this week in China’s provinces of Henan, the country’s largest wheat area, as well as in Hebei and Shandong, the China Meteorological Administration said.

Experts said the snow was beneficial to the wheat crop in China, the world’s largest wheat producer and consumer.

“The snowfall is more conducive for wheat, it brings moisture to the soil. Earlier, some wheat areas have had dry weather,” Zhao Guangcai, a researcher with Chinese Academy of Agricultural Sciences, told Reuters.

But he said some young wheat leaves suffered minor freeze damage.

Another researcher with the Henan Academy of Agricultural Sciences said the snow helped kill insects and save water for farmers.

Feed mills in China’s consuming south, however, could face tigher corn supplies because the snow in the north has prevented farmers from selling their new harvest and delayed rail transport.

“Corn supplies are quite tight these days; there are some delays in transport,” said one official with the New Hope Group in the southwest province of Sichuan. The company was also looking for more imports from neighbouring countries [ID:nPEK205454].

The China National Grain and Oils Information Center said the bad weather also could reduce supplies for markets in Guangdong. Tight supplies have driven up China’s physical corn prices <0#ASCORN-CN> even at harvest time.

Soybeans and corn edged higher after losses in the previous session on prospects of better harvest weather next week.

“We have seen the dollar claw back some ground and that is in conjunction with a negative turn in macroeconomic sentiment,” said Toby Hassall, an analyst with Commodity Warrants Australia.

“We had such a significant move in wheat last week, really there wasn’t a huge degree of fundamentals behind that rally in terms of global demand and supply.”

Wheat surged last week to a four-month high, propelled by fund buying and rains that delayed sowing of the US winter wheat crop. Corn and soybean also rallied as wet weather slowed the harvest of this year’s big crops.

But forecasts of favourable weather and a strengthening dollar knocked down the grain markets on Monday, with corn dropping 5 per cent, wheat losing 3.8 per cent and soybeans 1.9 per cent.

The US Agriculture Department said that soybean harvest was 44 per cent complete as of October 25, well below the five-year average for late October of 80 per cent. Corn harvest was 20 per cent complete compared with the five-year average of 58 per cent.

Traders had been expecting the USDA report to show that soybean harvest was 50 to 55 per cent complete and corn harvest was 20 to 25 per cent complete.

“If we do start to see a favourable outlook for harvest than that harvest delay risk premium is going to be wiped out,” said Hassall.

The National Development and Reform Commission (NDRC) said in an announcement on its website that the minimum purchase prices for white wheat and red wheat will be increased by 3 yuan (US$0.44) from the 2009 level to 90 yuan and 86 yuan for every 50 kg, respectively.

The move aimed to protect farmers’ interests and promote grain production, according to the NDRC.

(Xinhua News)