May 14, 2007

China wheat prices slightly down amid pressure from more supply
 

Wheat prices in China were slightly lower in the two weeks to Monday, with stocks sufficient as the harvest season approaches.

Prices of average-quality wheat in Henan province were at RMB1,440-1,520/tonne compared with RMB1,490-1,520/tonne before the Labour Day holiday.

In Shandong, another major wheat-producing region, prices were at RMB1,560-1,580/tonne, slightly lower than RMB1,580-1,600/tonne two weeks ago.

Chinese markets were closed from May 1 through May 7 for the holiday.

Supply is sufficient due to the government's continual auctions of wheat, and farmers sped up sales of their stocks ahead of the harvest season in June.

China sold 217,400 tonnes of wheat during its weekly auction last Thursday, or about 33 percent of the 662,100 tonnes it planned to sell.

China began holding regular auctions at the end of last year to sell wheat bought under the minimum purchase price programme in 2006 to ensure stable domestic supply.

Processing plants slowed purchases due to light demand for flour, the National Grain & Oil Trade Centre said in an article published on its website.

Despite plentiful supplies, analysts expect wheat prices to be stable going into the new marketing season as the government has repeatedly said it will continue its minimum purchase price programme this year and prices will be at least the same as those last year.