June 29, 2009

China new wheat prices higher as farmers reluctant to sell

China's new wheat prices in the major producing areas were higher in the week to Monday (June 29) as farmers were reluctant to sell, while old wheat prices remained mostly stable.

New wheat prices in Anyang in Henan province were around RMB1,880 a tonne, up RMB80 from a week ago.

New wheat prices in Dezhou in Shandong province were at RMB1,840-RMB1,870/tonne, higher than RMB1,800-RMB1,820/tonne a week earlier.

Farmers were still busy with summer planting and didn't have the time to sell new wheat in large volumes, while China Grain Reserves Corp. started to purchase wheat for reserves.

They were also reluctant to sell as wheat prices usually rise after the harvest on the government's minimum purchase prices, said China National Grain and Oils Information Centre in its note.

Meanwhile, the quality of wheat this year isn't as good as last year due to bad weather during the harvest, and this may push up the prices of better quality wheat, said Hai Yang, an analyst with Zhengzhou Esunny Information & Technology Co. Hai added this year's output could be the same as last year.

Low-quality wheat can only be used as feedmeal or for industrial use.

Last week, the government sold 263,600 tonnes of old wheat it had earlier purchased under the minimum purchase price programme or 18 percent of the 1.49 million tonnes it planned to sell.

Trading during the weekly auctions has been sluggish with the market focus now on new wheat.