April 3, 2006

 

China wheat prices mostly flat on weaker sales by farmers
 

 

Wheat prices in China changed little in the week to Monday (Apr 3), as weaker sales from farmers deflated prices in the market, analysts said.

 

"Farmers were busy with spring plowing and spent less time on (wheat) sales," said Chen Kang, an analyst with the National Grain & Oils Information Centre.

 

"This helps to reduce the market supply, so prices remained largely stable in the past week," Chen said.

 

Prices of average quality wheat in Henan, China's biggest wheat-producing province, were mostly unchanged at RMB1,320-RMB1,340 a tonne.

 

In Hebei, another major wheat-producing province, prices were at RMB1,380-RMB1,400 a tonne, also little changed.

 

The average price in Shandong province was around RMB1,380-RMB1,400 a tonne, also unchanged.

 

Meanwhile, mills were still buying no more than what they needed, given the over-supply situation, while local grain reserves' routine sales to exchange old stocks for new grains, are still weighing on the market price, analysts said.

 

"It's still hard to predict whether consumption can pick up in April, ahead of the Labour Day holiday," Chen said.

 

Whether or not local traders choose to speed up selling after supply from farmers begins to drop, will largely determine wheat prices next month, analysts said.

 

"We have no statistics about how much stocks they (traders) have sold, and the pressure on them to pay back bank loans accordingly," Chen said.

 

Local grain traders usually sell their old wheat stocks to pay back existing loans before they secure new loans to purchase new grains.

 

The rise in output of major grains during the past two years, though in line with the Chinese government's ambition to be self-sufficient, has also led to pressure on prices in the local markets.