November 13, 2007

China wheat prices higher on strong demand

China's wheat prices were higher in the week to Monday on stronger demand amid dwindling supply.

Wheat prices offered by flour processing plants in Yuncheng in Shanxi province were between RMB1,580-RMB1,630 a tonne, up RMB30/tonne from a week ago.

Enter-factory prices in the Jiaodong area in Shandong province were RMB60/tonne higher than a week before at RMB1,720-RMB1,800/tonne, while RMB10-RMB20/tonne higher at RMB1,690/tonne in Zibo city in the province.

Farmers weren't eager to sell as wheat prices were lower than what they expected, while overall prices have been rising, said National Grain & Oil Trade Center in a statement published on its Web site.

An increasing wheat flour sales volume helped to boost demand and competition for limited wheat, it added.

Wheat flour consumption enters into a peak season ahead of the year-end holidays and higher transportation fees, a result of higher domestic oil product prices, also supported wheat prices.

Last Thursday, China sold 452,900 tonnes of wheat bought under the minimum purchase price program, or 31 percent of the 1.45 million tonnes it planned to sell.

Wheat prices are likely to go higher in the near term before the government issues more measures to ease tight supply, said Hai Yang, an analyst at Zhengzhou Esunny Information & Technology Co.

(RMB 1 = US$0.134916)