May 29, 2007

 

China wheat prices higher; weather unfavourable for output

 

 

Wheat prices in China were slightly higher in the week to Monday (May 28) as farmers were reluctant to sell due to unfavourable weather.

 

Purchase prices of average-quality wheat in southern Henan province were at RMB1,480-1,500 a tonne, RMB20-B30 higher than a week ago.

 

In Shanxi province, prices set by processing plants were at around RMB1,560/tonne, RMB40-50 higher than the previous week.

 

The dry weather in Henan province will reduce wheat output, said ChinaGrain.cn, a professional website for grains and oils information.

 

China announced its minimum purchase prices for wheat Friday, setting the minimum price for white wheat at RMB1,440 a tonne in 2007, unchanged from the price floor set last year.

 

The National Development and Reform Commission said it will set the minimum purchase price for red and mixed wheat at RMB1,380/tonne. The latest price floor for red wheat was the same as that in 2006.

 

Government warehouses will buy wheat from farmers between Jun 1 and Sep 30 at the minimum price if market prices are lower.

 

Current wheat prices are higher than the minimum purchase prices.

 

Traders expect the minimum purchase prices will help to support wheat prices when large amounts of newly harvested wheat enter the market.

 

The wheat harvest season for Henan is in late May to early June.

 

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.

 

The government sold 193,600 tonnes of wheat during its weekly auction last Thursday, or around 29 percent of the 658,400 tonnes it planned to sell.