April 12, 2004

 

 

China's Henan Province Sells Only Half The Wheat In Thursday Auction

 

Henan, the top wheat producing province in China, sold only about half of the wheat offered in an auction last Thursday, traders familiar with the auction said Monday.

 

According to traders, the auction saw sales of less than 400,000 metric tons of wheat from the 750,000 tons offered for sale.

 

Both the offer as well as the actual sale were below market expectations, traders said.

 

The average price of the sale was close to RMB1,500 ($1=RMB8.277) a ton, a trader from a local futures brokerage house in Henan said. The Henan Grain Trade and Logistics Market, which conducted the auction, had fixed the minimum price at which bids would be accepted at RMB1,480/ton.

 

Auction officials declined to comment on the amount of the sale or price at which the wheat was sold.

 

"We are doing the statistics now, and no timetable has been set for the release of the auction result," an official at the Henan Grain Trade and Logistic Market said Monday.

 

Last week, officials from the market had said it would offer close to 1 million tons of wheat in the auction.

 

Many local millers, on the other hand, adopted a wait-and-see approach, anticipating wheat prices to stay weak in the near term.

 

But downside potential for the wheat market has been capped by concerns that winter wheat production could be lower this year, grain market analysts in Beijing said.

 

"When wheat prices are falling, end users are not in a hurry to make forward coverage. But if the wheat harvest in June is as expected, the market could pick up pace again," an analyst from China National Cereals Oils and Foodstuff Import & Export Corp., or Cofco, said Monday

 

Normal grade wheat was offered around RMB1,540/ton in central Henan Monday, down about RMB60/ton from prices last week.