August 8, 2006

 

China wheat prices flat; limited storage at state warehouses

 

 

China's wheat prices were largely unchanged last week, though prices dropped slightly in some wheat producing regions due to limited storage space at state-owned warehouses, analysts said Monday (Aug 7).

 

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

 

Purchases by state warehouses at government-set prices accounted for over 80 percent of total farmers' sales, according to analysts.

 

Jun 1, China's central government appointed state-owned warehouses in six major wheat-growing provinces to buy white wheat at RMB1,440/tonne and red wheat at RMB1,380/tonne until Sep 30, as part of efforts to protect farmers' income.

 

Wheat prices before June were slightly lower than the government set prices.

 

"Wheat prices were mostly the same as they were the week before in major wheat producing provinces," said Li Ke, a senior analyst at China National Grain and Oils Information Centre.

 

However, local analysts said wheat prices witnessed a small drop in southern wheat producing provinces.

 

"In some areas in Henan, Hubei, and Jiangsu provinces, state warehouses had to lower purchase prices by RMB10-20 in order to control trading volume, because they did not have enough space to store the purchased wheat," said Hai Yang, an analyst at Zhengzhou Esuuny Information Technology Co.

 

"Prices in Hebei and Shandong remained unchanged as buying by state warehouses in these provinces proceeded smoothly," she said

 

Hai added that wheat exports increased a little this month on high prices in the US, which might lend support to wheat prices later this year.