June 13, 2006

China wheat prices mostly higher at government-set levels

China's wheat prices continued to rise last week, mostly reaching government-set minimum purchase prices, with the harvest of winter wheat.

In Henan and Hebei provinces, China's major wheat-producing areas, white wheat prices were quoted at nearly RMB1,440 a tonne and red wheat around RMB1,380/tonne, matching price levels set by the government, said Chen Kang, an analyst with National Grain and Oils Information Centre (NGOIC).

China's government decided to implement the policy in early March, hoping to protect farmers' incomes in an oversupplied market.

The policy is being adopted in six provinces Jun 1-Sep 30.

"Although non-government designated buyers are allowed to buy at prices other than the prescribed ones, there were few such cases," said Chen Kang.

"Prices will probably remain at the current level, without much changes in the following months," he said.

China's NGOIC said total output of winter wheat to be harvested in June is estimated to reach 9.25 million tonnes, up 1 percent on year.