July 24, 2006

 

China wheat prices unchanged amidst active trading

 

 

China's wheat prices were unchanged last week, as selling by farmers to state warehouses at government-set minimum purchase prices remains active.

 

Wheat prices in major producing regions were quoted at between RMB1,380 and RMB1,440 a tonne.

 

Chinas central government requires state-owned warehouses in six major wheat-growing provinces to purchase white wheat at RMB1,440/tonne and red wheat at RMB1,380/tonne until Sep 30.

 

Since the enforcement of the policy on Jun 1, buying by state warehouses at government-set minimum prices has continued to increase, analysts said.

 

"Farmers have sold 30-40 percent of their crop in major wheat producing provinces," said Li Ke, an analyst at China National Grain & Oils Information Centre.

 

He added that farmers usually stockpile half of their crop for sale later in the year.

 

Wheat prices before June were slightly lower than the government-set prices. However, the situation varies between wheat provinces.

 

"Farmers in southern provinces, such as Anhui, Hubei and Jiangsu, are about to finish selling wheat to state warehouses as the summer rice harvest approaches," said Hai Yang, an analyst at Zhengzhou Esuuny Information Technology Co.

 

"Farmers in Hebei are still reluctant to sell to state warehouses, and are holding over 80 percent of their crop in stock in expectation of higher market prices later in the year," she said.

 

"In Henan, farmers have sold around 40 percent of their crop to state warehouses, which are so constrained for storage space that some of their purchases have to be stored outdoors," Hai added.