June 26, 2007

 

China old wheat prices lower amid weak demand, ample stocks
 

 

Old wheat prices in China were slightly lower in the week to Monday (Jun 25), but newly harvested wheat was higher as farmers held out for better prices.

 

The ex-factory price of average-quality wheat in Henan province was about RMB1,500/tonne, the same as the previous week.

 

In Shandong, another major wheat-producing region, the average ex-factory price was RMB1,520/tonne, RMB10/tonne lower from a week earlier.

 

Wheat demand is usually not strong in summer, while ample stocks and sluggish demand will likely push the prices of old wheat lower, said Shanghai-based Dalu Futures.

 

China has almost completed its wheat harvest, with prices of new wheat higher last week as farmers were reluctant to sell in expectation of better prices.

 

High corn prices will encourage feed millers to use more wheat instead of corn, said Hai Yang, a wheat analyst at Zhengzhou Esunny Information Technology Co.

 

China uses a minimum purchase price programme to protect wheat farmers' interests.

 

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

 

New wheat purchase prices in Shandong province last week were at RMB1,440-1,460/tonne, RMB20-40/tonne higher than the previous week.

 

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

 

China sold just 74,600 tonnes of wheat during its weekly auction last Thursday (Jun 21), or about 11 percent of the 663,700 tonnes it planned to sell at the auction, up from 66,200 tonnes two weeks ago.

 

RMB1=US$0.1313 (Jun 26)