China wheat prices jump on higher corn prices, rising demand

China wheat prices in major producing areas jumped in the week to Monday tracking higher corn prices and rising demand.

Wheat prices in Dezhou in Shandong province were around RMB1,950 a tonne, versus RMB1,910-RMB1,920/tonne a week ago, while in Zhengzhou in Henan province they were RMB1,940/tonne, compared with RMB1,920/tonne a week ago.

A drought in major corn producing areas in the northeast has raised concerns of a fall in output, pushing prices higher.

As wheat can substitute corn to feed animals, higher corn prices usually result in more wheat being used as feedmeal.

This is already happening in Henan province, and farmers are more reluctant to sell wheat as a result, said Hai Yang, an analyst with Zhengzhou Esunny Information & Technology Co.

China's total corn output in 2009 will likely fall 19.97 million tonnes, or 12 percent, to 145.94 million tonnes due to the ongoing drought, Li Qiang, chairman of Shanghai JCI, a commodities consultancy firm, said last week.

Meanwhile, rising flour demand ahead of the National Day holiday and mid-autumn festival in October have boosted wheat prices.

This year the National Day holiday will be longer than the usual one week, resulting in more people travelling within the country, boosting consumption at hotels and restaurants.