China wheat prices rise; holiday demand, corn prices support

Wheat prices in China major producing regions rose in the week to Monday (September 14), as holiday demand and supply pressures on corn, a substitute for wheat, continued to lend support.

In Zibu, Shandong province, a major wheat-producing area, prices were up around RMB20 (US$2.92) a tonne at RMB2,000 (US$292.80)/tonne, said Hai Yang, an analyst at Zhengzhou Esunny Information & Technology Co.

In Hengshui, Hebei province, wheat prices were around RMB1,990-RMB2,000/tonne, also up about RMB20-RMB30/tonne.

Flour prices have risen in step with demand during China Mid-Autumn Festival, spurring wheat prices upward, Hai said.

"Demand usually increases in September because of the flour used in the crusts for mooncakes," she said.

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

Since corn is a substitute for wheat in animal feed, farmers have increasingly turned to wheat, Hai said.

The country total corn output in 2009 will likely fall by about 20 million metric tons, or 12 percent, to 146 million tons because of the drought, analysts have said.

US$1 = RMB6.83 (September 14)