China wheat prices stable ahead holidays; more upside seen

Wheat prices in China major producing regions stayed largely stable in the week to Monday, in quiet trade ahead of major Chinese holidays beginning October 1.

In Zibu in Shandong, a major wheat producing province, prices were RMB2,000 (US$293)/tonne, unchanged from a week earlier, said Hai Yang, an analyst from Zhengzhou Esunny Information & Technology Co.

In Hengshui, in Hebei province, wheat prices were around RMB2,000/tonne, also mostly flat.

Wheat prices depend on flour demand, which traditionally rises in the fall ahead of the Chinese Mid-Autumn Festival and the eight-day National Day celebrations, but trade usually tapers off close to the start of the holidays.

Wheat prices may see more upside in coming weeks because output of corn, a substitute for wheat in animal feed, appears to be threatened by drought in major corn producing areas.

"I've heard reports of problems with output in Henan province, but how large the problem is remains to be seen," Hai said.