May 19, 2009

Wheat prices in China's major producing areas were mostly stable in the week to Monday (May 18) as buyers stayed away expecting prices to fall with a fresh harvest hitting the market in a few weeks.

Prices in Anyang, in Henan province, were between RMB1,870-RMB1,880 a tonne, unchanged from last week, and at around RMB1,840-RMB1,850/ton in Jinan, Shandong province, same as a week ago.

Analysts said participants were waiting for the fresh crop to arrive around its regular schedule of early June, keeping trade of the existing stocks muted. The likelihood of a higher output because of sowing over a larger area is fuelling expectations that prices may fall.

Planting in Helongjiang province, a major wheat producing area in the country's northeast, has increased about 13 percent on year to 741,316 acres in 2009, according to a statement from China's National Grain & Oil Trade Centre.

Also, prices are currently higher than those of corn, discouraging companies from using wheat for making feedmeal.

"Wheat prices are still higher than corn prices, and that makes it harder for feedmeal processors to replace corn with wheat," said Xu Wenjie, an analyst with Tianma Futures.