Wheat prices in China's key producing areas were mostly higher in the week to Monday (Jul 5) on shortages amid rising prices for corn.

 

Wheat prices in Xuzhou, Jiangsu province, were around RMB1,970 a tonne (US$290.9), RMB10 (US$1.5) higher than a week ago, said Hai Yang, analyst with Zhengzhou Esunny Information & Technology Co.

 

Prices in Zhengzhou, Henan province, were around RMB1,980/tonne (US$292.4), largely unchanged from last week.

 

The government support price guarantees state intervention when the market price falls below the guaranteed level but does not automatically trigger policy purchases when the price moves sharply in the other direction, analysts said.

 

Wheat prices Monday were up about 14.6% on year, a Jiangsu province newspaper reported.

 

Shortages were prevalent in Jiangsu, Henan, Hebei, Shandong and other areas, Hai said. Rising prices for corn, a substitute grain, brought upward pressure on wheat prices as well.

 

Despite six years of consecutive annual bumper harvests, China's urbanisation means rural agricultural producers are losing labour, even as rising living standards strain national grain demand, which is estimated to top 572.5 million tonnes by 2020, according to the Ministry of Agriculture.

 

Last year, China harvested a record 530.82 million tonnes of grains, up 2.3 million tonnes on year. But demand growth means the national harvest would have to grow by about four million tonnes a year over a decade to maintain the government's target of 95% self-sufficiency in grains.

 

Most analysts estimate this year's harvested output may be flat from last year. The current summer grain harvest of around 123 million tonnes, accounting for a third of the full year, has been estimated to be anywhere from 350,000 tonnes lower to one million tonnes higher than last year's output.

 

Wheat prices are likely to see more gains in the coming weeks as demand stays strong, Hai said.