December 12, 2005

 

China wheat prices mostly steady

 

 

Wheat prices in major producing regions of China were mostly steady in the week to Monday, as buying was normal due to unchanged flour demand, traders said.

 

In Henan, China's largest wheat-producing province, prices of average quality wheat were quoted about RMB1,400-1,450/tonne Monday, unchanged from a week earlier.

 

Prices of average quality wheat were quoted about RMB1,400-1,460/tonne in Shandong province, largely steady from RMB1,410-1,460/tonne a week earlier, local traders said.

 

Wheat prices in Hebei province ranged from RMB1,440-1,500/tonne, also steady from a week earlier.

 

"Normally, wheat demand would have begun an upward trend by now, as China's holiday season is approaching," said a Shandong-based trader. "But we haven't seen it so far."

 

Mills usually build up their wheat stocks and increase their operations to prepare for higher flour demand ahead of the Spring Festival, which marks the start of the Lunar New Year.

 

China's Spring Festival holidays would begin in late January.

 

Wheat prices are even likely to trend slightly lower, as flour demand has not risen as expected, while government selling continues, according to some traders.

 

Last Thursday, China's northern Tianjin city sold 800,000 tonnes of local wheat reserves at an average price of RMB1,371/tonne.

 

The wheat, produced in 2000-2002 and owned by the local government, was sold at a price range of RMB1,350-1,380/tonne.

 

"Without fresh buying, more selling from the government will pressure the market," said one trader.

 

In the past several weeks, local governments in several provinces have stepped up selling their old stocks, which are usually sold in the market early each year.

 

However, the central government ordered a halt to sales early this year, due to concerns of an oversupply in the summer, when new crops entered the market.