August 15, 2006

China's wheat prices unchanged; trading situations differ

China's wheat prices were little changed last week, with trading volumes up in northern provinces and down in the central and southern ones, a local analyst said Monday (Aug 14).

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

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

Since the policy began to be enforced, buying by state warehouses at the government-set prices accounted for over 80 percent of total farmers' sales, traders said.

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

"In Jiangsu, Anhui, and Henan provinces, constrained by limited storage, state warehouses had to reduce purchases of wheat from farmers," said Hai Yang, an analyst at Zhengzhou Esuuny Information Technology Co.

"This might continue to be the situation, given state warehouses are almost the only buyers in those regions and other wheat trading firms are still watching, in hope of lower prices later this year," said Hai.

"However, in Hebei, Shangdong, another two major wheat producing provinces in the north, trading volume started to pick up with prices increasing slightly in some areas," she added. China's weak exports are expected to increase this year as wheat prices are lower in the domestic market than in the international market, according to Hai.