Grain imports grow as eating habits change (2)

Wang said this has caused a price gap between Chinese and foreign grain and stimulated imports.

According to the US Department of Agriculture, the average US wheat price was $305.70 (1,873 yuan) per ton on Monday. But, as of Tuesday, the price traded on China's Zhengzhou Commodity Exchange was 2,580 yuan per ton.

With difficult conditions in many world markets, "inelastic demand for agricultural products has produced a safe house for investment", said Ding Lixin, a researcher at the Chinese Academy of Agricultural Sciences in Beijing.

"Thus, China is keen to buy more grain on the world market to boost its grain reserves."

As a major grain importer, China has a huge influence on global grain prices. Major purchases made by Chinese grain importers, usually giant State-owned enterprises such as the COFCO Group and the China Grain Reserves Corp, are quite possibly pushing prices higher at the Chicago Board of Trade.

Frost and then wet conditions during the harvesting season in Henan, Anhui, Jiangsu and Shaanxi provinces cut China's wheat output in the first half.

In Henan, for example, about 113,333 hectares of planted area for wheat was damaged by adverse weather.

The USDA has raised its forecast for Chinese wheat imports by 5 million tons to 8.5 million tons in the 2013-14 crop year.

The Food and Agriculture Organization of the United Nations has forecast that China's wheat imports for 2013-14 will reach 5 million tons. The FAO forecast is based on June and July trade figures, which were 2 million tons above the levels of 2012-13 and the highest since 2004-05, when China imported 7.3 million tons of wheat.

Abdolreza Abbassian, a senior economist at the FAO, said the weather also affected this year's wheat quality, another reason for higher imports.

"Another reason for larger purchases of wheat could be associated with stocks, which may be relatively low. Thus China may be importing more also to build depleted inventories," Abbassian said. "The FAO doesn't expect China's wheat production, including already harvested amounts before mid-June this year, to decline by 20 million tons.

"Wheat production in China this year is likely to be close to last year's record level of about 120.5 million tons," said Abbassian.

"The stable growth of China's agricultural output and increasing national incomes have meant better access to food," said Yu Bin, director of the Department of Macroeconomic Research at the State Council Development Research Center.

"The most obvious (impact) is the modernization of the livestock and food supply chains. That is a big area and there are lots of investments going on there."

Yu said China's ongoing urbanization is transforming 17 million people from farmers to urban residents every year, which means their diet will change from grain to more protein-rich foods such as meat, eggs, milk and yogurt.

These foods are ultimately based on a huge amount of grain consumption, so they indirectly lead to growing imports.

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