March 24, 2009
China wheat prices mostly stable as government hikes sales prices
Wheat prices in China's major producing areas were mostly stable in the week to Monday (March 23), supported by the government's hike of wheat sales prices.
Wheat prices in Dezhou in Shandong province were between RMB1,860 to RMB1,900 a tonne, stable from a week ago.
Wheat prices in Huaibei region in Anhui province were stable at around RMB1,820/tonne.
Last Wednesday, the government further increased wheat auction base prices by RMB40-RMB60/tonne, but this dampened demand.
During the weekly auctions, the government sold 1.28 million tonnes of the wheat it bought under the minimum purchase price programme, or 56 percent of the 2.31 million tonnes it planned to sell, compared with 1.62 million tonnes it sold last week.
Traders weren't willing to compete for the wheat as they have been buying actively recently, and higher prices kept them on the sidelines, said Tianqi Futures in its note.
Meanwhile, supply will be ample in the coming months as the government needs to sell more wheat to make room for the purchase of new wheat, which will be harvested in June, it said.
Winter wheat growth has almost recovered to last year's level after an earlier drought, which was largely eased by rainfall and irrigation, said the Ministry of Agriculture last week.
China National Grain and Oils Information Center expected wheat demand from wheat flour processing plants to be mostly stable in the near term, with purchases likely to increase somewhat on dwindling stocks.
