March 2, 2006

China sets minimum 2006 purchase prices for wheat, rice

China announced this year's minimum purchase prices for wheat and rice on Monday (Feb 27), aiming to protect farmers' incomes, according to the National Development and Reform Commission's (NDRC) website.

The minimum purchase price for white wheat has been set at RMB1,440 a tonne and red wheat at RMB1,380/tonne.

The prices are both higher than the current prices. Average quality white wheat in Shandong province is around RMB1,420/tonne, while red wheat in Jiansu province is around RMB1,300/tonne.

Analysts said the prices are likely to fall further, as more stocks will be sold in the market this month because farmers need cash to prepare for spring seeding, while even bigger output can be expected this year.

"I think the NDRC's decision targets new wheat in June, but I'm not sure. The notice on the website is not very clear," said Chen Kang, an analyst with the China National Oils and Grains Information Centre.

The government began implementing the state reserve purchasing policy last year, asking designated state-owned corporations to buy grains when prices fall below the government-set reference price.

The minimum purchase prices for early Indica rice, late Indica rice and Japonica rice are set at RMB1,400/tonne, RMB1,440/tonne and RMB1,500/tonne respectively.