February 5, 2007

China wheat prices largely stable; supply, demand balanced
 

Wheat prices in China were largely stable in the week to Monday amid balanced supply and demand conditions, analysts said.

Prices of average-quality wheat in Henan province were at RMB1,480-1,520/tonne compared with RMB1,460-1,520/tonne a week earlier.

Prices of average-quality wheat in Hebei province were at RMB1,560-1,580/tonne, little changed from RMB1,560-1,570/tonne in the previous week.

In Shandong, another major wheat-growing province, they were about the same as those in Hebei, flat from RMB1,560-1,570/tonne a week earlier.

"Supply is sufficient despite a higher settlement rate at the last weekly auction, which showed demand's rising," said a Beijing-based analyst.

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, the government sold 391,830 tonnes of wheat in six provinces, or 55 percent of the 711,000 tonnes that it had planned to sell.

A week earlier, it sold 412,100 tonnes of wheat, or 51 percent of what it had planned to sell.

With the nearing of the Chinese Spring Festival this month, a holiday season also known as Chinese New Year, wheat processing plants will purchase more of the grain for their reserves, the analyst said, but added that the expected rise in demand is unlikely to push up prices since supply is stable.