January 29, 2007

China wheat prices stable, slightly down in Henan province
 

Wheat prices in China were largely stable in the week to Monday, but prices in some parts of Henan province fell slightly due to sufficient supply.

Prices of average-quality wheat in Henan province were at RMB1,460-1,520/tonne, compared with RMB1,500-1,560/tonne a week earlier.

Prices of average-quality wheat in Hebei province were at RMB1,560-1,570/tonne, little changed from the previous week. In Shandong province, another major wheat-growing province in China, prices also ranged from RMB1,560-1,570/tonne, unchanged from a week earlier.

"The low settlement volume in the recent weekly wheat auctions showed the large demand ahead of China's Spring Festival is met," said Pan Wei, a wheat analyst at Dalu Futures Co. in Shanghai.

China has been holding auctions of wheat bought under the minimum purchase price programme since late last year to ensure stable domestic supply.

Last week, China sold 412,100 tonnes of wheat in six provinces, or 51 percent of the total 812,900 tonnes it had planned to sell. A week earlier, it sold 392,900 tonnes, or 49 percent of the planned volume.

Henan province has almost half of the wheat reserves purchased under the government's minimum purchase prices in 2006, and only 2.1 million tonnes of that were sold in the province, or one tenth of its reserves.

China Grain Reserves Corp. purchased 40.69 billion kilograms of wheat at the government's minimum purchase prices in 2006, the official Xinhua News Agency reported earlier this month.

Wheat prices in the cash market are likely to be supported at RMB1,460/tonne before the week-long Spring Festival, which begins Feb 18 this year, said Hai Yang, a wheat analyst at Zhengzhou Esunny Information Technology Co.