March 19, 2007

 

China wheat prices higher as output seen reduced in Shandong
 

 

Wheat prices in most of China's major producing regions rose in the week to Monday, as the country's wheat output is expected to decline this year.

 

In Shandong, a major wheat-growing province, prices of average-quality wheat rose to RMB1,540-1,620/tonne from the week-ago level of RMB1,560-1,600/tonne.

 

Wheat output in the eastern province may decline by about 17 percent from last year due to a reduced growing area, said Hai Yang, a wheat analyst at Zhengzhou Esunny Information Technology Co.

 

Higher prices in Shandong helped to push up prices in other areas.

 

Prices of average-quality wheat in Henan province were quoted at RMB1,520-1,580/tonne, compared with about RMB1,500/tonne a week earlier.

 

Prices of average-quality wheat in Hebei province were quoted at RMB1,540-1,600/tonne, compared with RMB1,560-1,600/tonne in the previous week.

 

Analysts expect supply to be slightly tight in the coming months as flour mills will likely actively buy ahead of the country's minimum purchase price programme, likely in mid-2007.

 

Under the programme, aimed at protecting farmer incomes, the country bought 40.69 billion kilograms of wheat through China Grain Reserves Corp. last year.

 

China sells wheat bought under the programme weekly, to stabilise prices.

 

The country sold 704,900 tonnes of wheat in six provinces during its weekly auction Thursday, or 76 percent of the 923,200 tonnes it planned to sell.