March 17, 2009

China's wheat prices in major producing areas were mostly stable in the week to Monday (March 16), with prices in some areas lower as supply increased.

 

Wheat prices in Anyang in Henan province were at RMB1,840 to RMB1,860 a tonne, almost unchanged from a week ago.

 

Wheat prices in Jinan in Shandong province were at RMB1,840 to RMB1,900/tonne, also stable.

 

Wheat prices in Hebei were around RMB1,870/tonne, down RMB10/tonne.

 

Many processing plants turned to buying wheat from the government as wheat prices have been rising rapidly recently.

 

The government's continued supply helped to stabilize the wheat prices.

 

Last week, the government sold 1.62 million tonnes of wheat it bought under the minimum purchase prices programme, or 81 percent of the 1.99 million tonnes it planned to sell.

 

Meanwhile, farmers increased their wheat sales as expectations for higher prices eased on an improving drought situation, said China Zhengzhou Grain Wholesale Market in a note published on its Web site.

 

Weaker demand for flour, due to the return of migrant workers to the countryside, also helped to curb the rise in wheat prices, said Tianqi Futures.

 

The government has sold 14.82 million tonnes of wheat it bought from the 2008 harvest, or 35 percent of the total purchase of 42.02 million tonnes, according to data from Zhengzhou grain market.

 

Looking ahead, wheat prices will be mostly stable, and could even go slightly higher as the government controls most of the crop and has stated it aims to increase farmers' income, said analysts.