November 3, 2006

 

China's Henan and Anhui province to auction 1 million tonnes of wheat

 

 

China's Henan and Anhui provinces will auction 1 million tonnes of summer-harvested wheat Friday and Saturday, the China National Grains & Oils Information Center said Friday (Nov 3).

 

Friday to Saturday, Anhui Grain Wholesale Market would auction 502,500 tonnes of wheat that were harvested in the major wheat producing provinces of Jiangsu, Hubei, and Anhui this summer, the government backed think-tank said.

 

The floor prices in this auction are RMB1,440/tonne (US$183) for red wheat and RMB1,460/tonne for white wheat, it added.

 

At the same time, Henan province plans to sell 500,000 tonnes of wheat harvested in Henan this summer in an auction Friday, according to China Zhengzhou Grain Wholesale Market.

 

The floor prices in this auction range from RMB1,440-RMB1,460/tonne,(US$183-US$185.5)  according to a local trader.

 

State-owned Anhui and Zhengzhou Grain Wholesale Markets are two major grain trading centers in central China.

 

Under a plan to protect farmers'; incomes, China's state-owned warehouses in six major wheat growing provinces bought wheat at RMB1,380-RMB1,440/tonne (US$175.3-US$183.0)during the June 1-Sept. 30 harvesting season.

 

Purchases by state-owned warehouses accounted for more than 60 percent of the new harvest this year, according to local traders.

 

As a result, the government can control wheat prices.

 

"Floor prices for the two auctions are pretty high, which indicates the government expects to prop up domestic prices," said a CNGOIC analyst.

 

Wheat prices held relatively stable in China over past two months, while international prices have soared, traders said.

 

"Although bidding has not been very active so far, the market has definitely received the signal from the government," a trader said, adding that bidding began early this morning.