April 14, 2009

Wheat prices in China's major producing areas were mostly stable in the week to Monday (April 13), but prices were lower in some areas on improved supply and sluggish demand.

White wheat prices in Jiangsu province were between RMB1,740 to RMB1,840 a tonne, unchanged from a week ago.

Wheat prices in Dezhou in Shandong province were around RMB1,930/tonne, stable from a week earlier.

White wheat prices in Lingbi in Anhui province were around RMB1,750-RMB1,760/tonne, down RMB10-RMB20.

The government has launched a nationwide check of grain stocks, and state-owned companies' wheat sales have fallen sharply as a result, helping to support prices, said analysts.

Market expectations that the government would further raise wheat auction prices lent support as well, although in the end, a hike wasn't approved, said a local wheat purchase manager.

But as wheat users had bought a large volume earlier and farmers had increased their offerings while demand remained sluggish, the sales volume at the government's auctions fell sharply.

Last week, the government sold only 311,200 tonnes of wheat it bought under the minimum purchase prices programme, or 16 percent of the 2 million tonnes it planned to sell, compared with 1 million tonnes sold in the previous week.

Domestic wheat flour plants are only operating at 50 percent to 60 percent of their production capacities, down from the usual 80 to 90 percent said the purchase manager.