February 7, 2006

China wheat prices unchanged in post-holiday trade

Wheat prices in China are little changed after the Chinese Lunar New Year holiday, compared with two weeks earlier.

Trading will likely remain quiet until the Lantern Festival at the end of this week as most farmers and enterprises usually resume work after the festival.

In Henan, China's biggest wheat-producing province, prices of average quality wheat were at RMB1,420-1,440/tonne.

"There usually aren't big price fluctuations soon after the Chinese Lunar New Year as supply and demand don't change greatly," said Pan Wei, a wheat analyst with Dalu Futures Co.

Demand usually shrinks in the post-holiday period with less consumption, and farmers usually don't sell stocks until March.

China imported 3.51 million tonnes of wheat in 2005, a fall of 51 percent from 2004, while local grain output has risen steadily in the past two years, with the help of favourable weather and government policies.

The Chinese government's policy is to ensure that the major source of grains will be domestic, "and the sufficient domestic supply implies that the market will be less influenced by international prices," Pan said.