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Kevin Van Trump has over 20 years of experience in the grain and livestock industry.
"Wheat crop has suffered" is what I am starting to hear more talk that China's more severely than original reports had indicated. Word is the damage was not only caused by frost during the growing season but also rain during harvest. Some insiders are now thinking close to 20 million tons of wheat or more (15-17%) could eventually be declared unfit for human consumption. To put it into context, that would be like Australia losing about 80% of their normal wheat production. The thing we need to remember is that China used a lot of wheat last year for feed when there was little to any corn to import and prices where sky-high. The question now is how much wheat do they have left? The other question is without a large supply of wheat on hand, what will act as a substitute for corn? Could corn imports in China explode to 10 million metric tons this season without a substitute? Even though global wheat output is expected to rise this year from last, we will still be below "demand" and could eventually push wheat stocks to some of the lowest levels in the past few years.
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