June 19, 2007

 

China wheat prices dragged lower by new supplies

 

 

Wheat prices in China were lower in the week to Monday (Jun 18), dragged down by the sales of new harvests.

 

Ex-factory price of white wheat in Henan province were at RMB1,490-1,510 a tonne, slightly lower than the RMB1,500-1,520/tonne a week ago.

 

In Shandong, another major wheat-producing region, prices were at RMB1,500-1,550/tonne, compared with RMB1,520-1,560/tonne in the previous week.

 

With 90percent of the wheat crop harvested as of last Thursday, the country is on track to complete the harvest by end June.

 

Newly harvested wheat needs to be stored for 90 days before it is ready for processing.

 

Wheat processing companies surveyed by the China National Grain and Oils Information Centre (CNGOIC) say the new wheat supply will, in the near term, exceed demand that has been damped by a price that is higher than the minimum purchase price, said CNGOIC.

 

This year, the minimum purchase price for white wheat is RMB1,440 a tonne, and that for red and mixed wheat is RMB1,380/tonne, both are unchanged from last year.

 

And with the minimum purchase price programme in place to protect Chinese farmers, wheat prices are unlikely to fall much, said traders.

 

China sold just 66,200 tonnes of wheat during its weekly auction last Thursday, or around 10 percent of the 651,500 tonnes it planned to sell at the auction, less than the 88,600 tonnes it sold a week earlier.

 

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.