March 5, 2007

 

China wheat prices stay stable amid light trade
 

 

Wheat prices in China were largely stable in the week to Monday amid sluggish demand and supply after the Lunar New Year holiday.

 

Trade was light as farmers have just come back from their long break.

 

Government offices, businesses and financial markets were closed Feb 19-23 for the Lunar New Year holiday, but for farmers, the holiday usually lasts until the Lantern Festival, which fell on Sunday this year.

 

Prices of average-quality wheat in Henan province were about RMB1,500/tonne, compared with RMB1,480-1,520/tonne before the holiday break.

 

Prices of average-quality wheat in Hebei province were at RMB1,560-1,600/tonne, compared with RMB1,560-1,580/tonne before the Lunar New Year.

 

In Shandong, another major wheat-growing province, prices of average-quality wheat were at RMB1,540-1,580/tonne, compared with RMB1,560-1,580/tonne before the holiday.

 

"The supply and demand are stable and balanced," said a Beijing-based analyst.

 

However, the recent cold weather may threaten output, he added.

 

Analysts said wheat prices will likely stay stable by end-March, but if the cold weather persists, wheat prices may face upward pressure in April and May as farmers will be reluctant to sell wheat stocks.

 

China's auctions of wheat bought under the minimum purchase price programme since late last year have been helping to stabilise wheat prices.

 

Last week, the government sold 556,000 tonnes of wheat in six provinces during its weekly auction, or 56 percent of the 1 million tonnes that it had planned to sell.