May 30, 2006

 

China's wheat prices stable; market awaits government-set price

 

 

Wheat prices in China were little changed compared with a weak ago, in a market quietly waiting for the minimum purchase price to be implemented on Thursday, analysts said.

 

"Traders have bought enough in the previous weeks in the hope of selling (wheat) at higher prices after the policy is implemented," said Li Ke, an analyst with National Grain and Oils Information Centre (NGOIC).

 

Li said although this is not allowed, it's technically difficult to distinguish the newly harvested wheat and the old wheat.

 

In Henan, China's biggest wheat-producing province, prices of average quality wheat were quoted nearly RMB1,400/tonne, little changed from the previous week.

 

In Hebei, another major producing province, prices remained at RMB1,400/tonne.

 

Beginning from Thursday, government-designated traders will buy wheat in six provinces at government-set prices, if local prices are below the reference prices.

 

This year's minimum purchase price for white wheat was set at RMB1,440 a tonne and red wheat at RMB1,380/tonne.

 

Wheat prices are expected to remain at this level in June-Sept, market analysts said.

 

Meanwhile, the NGOIC estimated the total output of winter wheat, to be harvested in June, to reach 9.25 million tonnes, one percent higher on-year.

 

A drought, which did have some impact on the growth of crops in certain areas, is not particularly serious, compared with the impact of similar droughts in the past few years, he said.