August 22, 2006

 

China's wheat prices steady; trading increases in the North

 

 

China's wheat prices were little changed last week, while trading volume rose in the north and declined in the south, analysts said.

 

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

 

Since the policy began to be enforced Jun 1, buying by state warehouses using government-set prices accounted for over 80 percent of total farmers' sales, according to analysts.

 

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 at RMB1,380/tonne until Sept. 30, in the hope of protecting farmers' incomes.

 

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

 

"Wheat prices were largely unchanged last week. Trading was active in northern provinces and declined in southern ones," said Li Ke, an analyst at the China National Grain & Oils Information Centre.

 

"Purchases by state warehouses have ended in Hubei province and are close to an end in Jiangsu and Anhui provinces," said Hai Yang, an analyst at Zhengzhou Esunny Information Technology Co.

 

Currently, farmers in southern provinces, such as Hubei, Jiangsu and Anhui, are concentrating on the harvest of rice, according to analysts.

 

"Farmers have sold nearly half of their crop to state warehouses in Henan province," Hai added, implying that Henan farmers have sold most of their stocks available for sale.

 

Wheat farmers usually keep around half of their crop in stocks for their own consumption or sale later in the year, analysts said.

 

"As schools are about to start lessons in September, farmers in Hebei and Shandong have increased their selling to state warehouses, so as to get cash to pay for tuition for their children," said Hai.

 

She estimated that buying by state warehouses would hit 30 million tonnes in six major wheat producing provinces by the end of August.

 

"Demand is expected to pick up in the coming weeks, as the Mid-Autumn Festival is on the horizon," Hai added, referring to China's second most important festival, which falls on Oct 6, during which consumption of food increases.