January 22, 2007

 

China wheat prices stable amid abundant supply

 

 

China's wheat prices stayed largely stable in the week to Monday as market supplies remained abundant.

 

Prices of average-quality wheat in Henan province were at RMB1,500-RMB1,560 a tonne, and in Heibei province, at RMB1,560-RMB1,570/ton, little changed from the previous week.

 

Prices of average-quality wheat in Shandong province, another major wheat-growing province in China, ranged from RMB1,560/tonne to RMB1,570/tonne, also flat from a week earlier.

 

"Supplies have been sufficient, and prices are likely to remain around this level for a while," said an analyst.

 

China has been holding auctions of wheat bought under the minimum purchase price programme since late last year to ensure stable supply, and the spate of auctions have eased the tightness in supply, said analysts.

 

Last week, China sold 392,900 tonnes of wheat in six provinces, 49 percent of the total 800,000 tonnes that it had planned to sell. A week earlier, it sold 612,548 tonnes, 61 percent of the planned volume.

 

But wheat prices are likely to drop after the Spring Festival, which falls on Feb 18 this year, as farmers will sell their wheat stocks ahead of the summer harvest, said Hai Yang, a wheat analyst at Zhengzhou Esunny Information Technology Co.

 

Large government reserves would also put downward pressure on wheat prices, she added.

 

The government bought 42 million tonnes of wheat in 2006, but has only sold around 10 million tonnes so far, she said.