December 6, 2010

High replenishment interest keeps China's grain prices up

Purchase prices of wheat and corn in China have recorded new highs last week (from November 29-December 3) as buyers stepped up replenishment before the Spring Festival holidays.

Average purchase price of wheat in major producing areas stood at RMB2,102/ tonne (US$315) and that of corn at RMB1,955/tonne (US$293) last week.

On November 25, the purchase price index of grain was 124.68, up 4.54% over the previous month and 16.3% over the same period of last year.

Grain purchases usually come to a peak at the year end as processing companies and traders all rushed to replenish inventories before the Spring Festival holidays which fall on February 3, 2011. Furthermore, farmers' reluctance to sell, adverse weather and difficult transportation in winter, all helped to push up grain prices.

Last month, China increased the supply of reserve grain into the market and in the meantime rolled out measures to regulate purchases.