According to Sina Finance, as late November began, wheat purchase prices at some flour mills in Shaanxi broke through the 1.3 yuan per jin threshold first. while multiple flour mills in Henan successfully reached the key threshold of 1.28 yuan per jin. Just as market enthusiasm reignited, wheat prices in Hebei retreated again, followed swiftly by Shandong. This rapid transmission to Henan, Anhui, Jiangsu, and other regions highlights the intense tug-of-war between buyers and sellers.

Wheat Market: High-Level Volatility and Regional Realignment

Since mid-November, wheat prices surged upward, with some Shaanxi flour mills breaking through the symbolic 1.3 yuan/jin threshold. Yet market sentiment cooled before prices turned downward. Driven by market dynamics, regional divergence and cross-regional flows are gradually reshaping future trends.

From flour mills' procurement volumes, a stark contrast emerges between northern and southern markets. Certain production areas in Hebei and Shandong witnessed both price hikes and increased volumes. Local mills seized the restocking window by adopting 24/7 procurement to aggressively replenish inventories, with some mills already reaching peak stock levels. To reduce procurement costs, some Hebei flour mills swiftly lowered wheat prices, prompting Shandong mills to follow suit. Seeing this, mills in Henan, Anhui, and Jiangsu also tentatively reduced wheat prices. From the volume perspective, flour mills in some major producing areas have fallen into a “double decline in volume and price” situation, which will become a key variable in the wheat market in the near term.

The widening north-south price disparity in wheat has accelerated cross-regional flows, reshaping market supply and demand dynamics. Currently, wheat from southwestern and north-central Henan continues to flow into Shaanxi to fill local supply gaps. Meanwhile, wheat from western Shandong exhibits bidirectional movement: some flows into Hebei, while others reverse into Henan. while wheat from Cangzhou and Hengshui in Hebei continues to flow out to central-southern Hebei and northern Henan. This series of movements is quietly altering the current wheat supply landscape: Hebei, once a price trough, is seeing its low-price advantage gradually diminish. As traders sell at higher prices during market fluctuations, the supply-demand dynamics in this price trough are continuously shifting. Meanwhile, central-southern Henan and eastern Henan—hubs for flour mills—have maintained high price levels. As both volume and prices decline, procurement ranges are expected to expand further into surrounding areas, potentially driving future wheat prices toward higher levels.

Traders' purchasing and sales mentality is also evolving. “Selling on price increases to lock in profits, holding back on price declines” has become the prevailing strategy. As market supply tightens, traders' bullish outlook is expected to strengthen, intensifying procurement battles with flour mills. Without new grain sources entering the market, short-cycle price fluctuations and volatility will become more pronounced.

Against this backdrop, national grain regulation policies serve as the core market barometer. The volume, timing, and duration of government-supported wheat releases and policy reserve wheat deployments remain pivotal concerns for the entire industry. The recent lack of concrete action on rumored government-supported wheat releases has provided additional support for the current price surge.

Amidst the fluctuating market for common wheat, the buying and selling dynamics for premium and specialty wheat are quietly evolving. Premium wheat meeting baking standards and specialty wheat with unique qualities are sustaining elevated prices due to their scarcity. Within a supply landscape dominated by private grain sources, the volume and timing of imported wheat shipments will be key variables influencing domestic premium wheat prices—a critical consideration for flour mills with specific needs.

Widening Gaps Among Flour Mills Reshape Competitive Landscape

From a market consumption perspective, the current lack of effective positive factors has led to persistently weak demand, with price fluctuations having limited impact on end-user consumption. Recent flour price increases represent a reluctant move by mills facing sustained rises in fixed costs like wheat, inherently lacking sustained upward momentum and limiting the scale of adjustments. Most flour mills fear losing customers through price hikes, opting instead to stabilize prices to maintain market share, thereby dampening upward momentum. Some distributors also worry about end-users switching to other brands, choosing to absorb price pressures internally. Collectively, these factors limit flour price growth potential. Overall, amid persistent weak consumption, declining sales, and rising costs, the market lacks foundation for sustained increases or significant declines in the near term.

This month's operating rate trends reveal a widening gap: leading enterprises maintain stable rates above 75%, with some reaching 90%. Small and medium-sized mills continue to fluctuate between 30-50%, though some achieve 55-60%. However, they remain below the break-even point, facing persistent operational challenges. The industry's overall low operating rate has reduced flour supply, strengthening flour mills' collective resolve to maintain prices. This trend also dampens price volatility and shortens the cycle of price fluctuations.

Wheat Prices Peak Then Retreat, Future Market Outlook Promising

According to Sina Finance, as late November began, wheat procurement prices at some flour mills in Shaanxi broke through the 1.3 yuan/jin threshold first. Multiple flour mills in Henan also successfully reached the key 1.28 yuan/jin mark. Just as market enthusiasm reignited, wheat prices in Hebei fell again, followed closely by Shandong.

Faced with volatile market risks, most distributors adopted prudent strategies such as “purchase and sell as needed” and “low inventory operations.” Simultaneously, they implemented flexible tactics like multi-brand operations and diversified product distribution. This approach diminished the promotional impact of flour mills and weakened the effectiveness of price adjustments. Amid market volatility, they prioritize purchasing brands that have not increased prices, have raised prices minimally, or have experienced significant price declines to mitigate the impact of fluctuations. This will accelerate the consolidation process within the flour industry from the sales end.

Currently, most enterprises face multiple pressures of low sales volume, low operating rates, and low profits. However, the actual consumption of flour has not changed significantly, and outstanding flour mills will always create relatively favorable business conditions. Only by thoroughly understanding the genuine consumption needs of different channels and end-users, developing and promoting cost-effective products that meet consumer demands, implementing scientific and meticulous internal management, optimizing services, and transforming purchasing relationships into mutually beneficial partnerships can companies continuously break through challenges and innovate forward.

Near-Term Market Outlook: Wheat Stabilizes at Elevated Levels, Flour Price Gains Face Pressure

Wheat Market: The wheat market is expected to gradually shift from a downward trend with volatility toward stabilization in the short term, with minor adjustments in some regions. Amid reduced policy-driven wheat releases and uncertainty surrounding government-supported wheat purchases, wheat prices lack a solid foundation for significant declines without new grain sources entering the market. Similarly, substantial short-term price surges are unlikely. However, regional supply-demand dynamics will continue to evolve.

Overall, industry differentiation will intensify. Enterprises with advantages in scale, distribution channels, and product innovation will further consolidate their competitiveness, while conservative operators may face increasingly severe survival challenges.

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