March 29, 2011

Wheat prices in China's major producing areas were little changed in the week to Monday (Mar 28), as flour mills have slowed purchases due to ample wheat inventories and stable flour prices.

Wheat prices in Zhengzhou, Henan province, were around RMB2,080 (US$317)/tonne, unchanged from a week earlier, while prices in Yicheng, Hubei province, were RMB2,030 (US$309)/tonne, also unchanged.

Flour mills will not expand their wheat purchases in the near term, as they have sufficient stocks, analysts said.

But demand for high-gluten flour, which is commonly used to make instant noodles, fine dried noodles and bread, remained strong, sending prices higher, they added.

Demand at the government's weekly auctions, which are major source for domestic flour mills seeking common wheat, fell sharply last week, with combined sales of 690,000 tonnes, compared with 1.3 million tonnes at auctions on March 17.

"Amid lack of fresh fundamental news, wheat prices will be stable in the next four weeks," experts said.

The government will auction 300,000 tonnes of feed-grade wheat from reserves to feedmills and farms Tuesday. Analysts said the sales will somewhat damp corn market sentiment.

The government has about 1.64 million tonnes of feed wheat in reserves, according to the Chinese Grain Network, a consultancy owned by China Grain Reserves Corp.