July 7, 2008

 

 

China's wheat prices in major producing areas rose in the week to Monday (July 6, 2008) as farmers were reluctant to sell on expectations of an increase in prices.

 

Sales remained low even as buyers increased their offer prices, analysts said.

 

New wheat prices in Xinyang in Henan, the country's biggest wheat-producing province, rose RMB20/tonne from a week before to RMB1,580-RMB1,600 a tonne.

 

New wheat prices in Dezhou in Shandong, another major producing province, were between RMB1,680-RMB1,710/tonne, while old wheat prices were at RMB1,700-RMB1,730/tonne, both up RMB50/tonne from a week ago.

 

The increase was a slowdown compared to the recent weekly gains as buyers were reluctant to make higher offers with rates already crossing the government's minimum purchase price. The recent increase in the volume of wheat sold at the government's regular auctions may also have helped in stabilizing prices, analysts said.

 

Although wheat demand would remain strong in the near term, the momentum of price increase has weakened, said China National Grain and Oils Information Centre in its note.

 

Wheat prices may remain around the current levels, said China Zhengzhou Grain Wholesale Market in a note.

 

The minimum purchase price for white wheat this year is RMB1,540/ton, up from RMB1,440/ton last year, while it is RMB1,440/ton for red wheat and mixed wheat compared with RMB1,380/ton in 2007.

 

Last week, the government sold 853,600 tonnes of old wheat it bought under the minimum purchase prices programme, or 71 percent of the 1.19 million tonnes it planned to sell.

 

(US$1= RMB 6.874)