February 28, 2006

 

China wheat prices slightly lower as demand shrinks

 

 

Wheat prices in most parts of China slightly fell in the week ending Monday Feb 27, as mills were reluctant to buy in anticipation of lower prices in the near future, analysts said.

 

Local wheat prices are under pressure as industry players expect more stocks will be put into the market in March, when farmers need cash to prepare for spring seeding, said Chen Kang, an analyst with China National Oils and Grains Information Centre.

 

Meanwhile, post-holiday demand for flour falls to the year's lowest point to date.

 

In Henan, China's biggest wheat-producing province, prices of average quality wheat were about RMB20 lower at RMB1,360-RMB1,420 a  tonne.

 

In Hebei province, another major producing base, wheat prices fell RMB10 to RMB1,420-RMB1,430/tonne.

 

Prices averaged RMB1,400/tonne, about RMB10 lower from the previous week, in Shandong province.

 

However, analysts said prices are unlikely to fall significantly.

 

"Government policies will follow to support it (the market), although it's still a bit too early to discuss it," Chen said.

 

Chen said preliminary analysis indicate China is likely to have an even bigger output of wheat this year than 2005, although it would take a few more weeks before the final estimate is out.

 

China's wheat imports fell 94.2 percent in January to 44,973 tonnes.

 

Agricultural experts said heavy snow in Henan province Monday will be helpful to the crops in terms of alleviating a drought.

 

And if it continues to snow, wheat prices are likely to be supported, as bad traffic conditions will make transporting goods more difficult.