August 1, 2006

 

China's wheat prices flat in thin trade

 

 

China's wheat prices were unchanged on thin trading last week, as state-owned warehouses slowed buying because of rains in China's north and rice harvesting in the south, analysts said.

 

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

 

On Jun 1, China's central government adopted a policy that 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.

 

Before June, wheat prices across China were slightly lower than government-set prices.

 

"Heavy rains hit northern provinces, such as Hebei, Shandong, and Henan, and led to a decline in wheat trading," Li Ke, an analyst at China National Grain and Oils Information Centre said.

 

"Farmers in southern provinces reduced selling to state owned warehouses, as they had to prepare for the approaching summer harvest of rice," said Hai Yang, an analyst at Zhengzhou Esuuny Information Technology Co.

 

"Hubei farmers have largely finished selling wheat to state-owned warehouses while trading volumes in Anhui and Jiangsu provinces have also fallen to relatively low levels," she added.

 

"Despite rains, buying by state warehouses in the northern provinces, including Hebei, Shandong, and Henan, proceeded smoothly," she said.

 

"Due to a lack of storage space, some state warehouses in Henan had to stop buying," Hai added.

 

"Most of the farmers have accepted the government set prices and will continue to sell to state-owned warehouses. Wheat prices will remain stable," Hai said.