June 5, 2007

 

China wheat prices largely stable; demand for old wheat steady

 

 

Wheat prices in China were largely stable in the week to Monday (Jun 4), with demand for old wheat steady while processing companies were waiting for newly harvested wheat.

 

Prices of average-quality wheat in Henan province were at RMB1,500-1,520 a tonne compared with RMB1,480-1,500 a week ago.

 

In Shandong, another major wheat-producing region, prices were at RMB1,530-1,560/tonne, stable from the previous week.

 

"As newly harvested wheat needs 90 days for its quality to reach the standard (for processing), the (marketing of) new wheat won't have much impact on the old ones," said Haiyang, an analyst at Zhengzhou Esunny Information & Technology Co.

 

China started the wheat harvest late last month.

 

The minimum purchase prices programme will help to support wheat prices this year, thus farmers were reluctant to sell in expectation of higher prices, said analysts.

 

China started the minimum wheat purchase price programme last year, and it set the minimum price for white wheat at RMB1,440 a tonne in 2007, unchanged from the price floor set last year.

 

Under the programme, government warehouses will buy wheat from farmers between Jun 1 and Sep 30 at the minimum price if market prices are lower.

 

China began holding regular auctions at the end of last year to sell wheat bought under the minimum purchase price programme in 2006 to ensure stable domestic supply.

 

It sold 168,000 tonnes of wheat during its weekly auction last Thursday, or around 26 percent of the 657,400 tonnes it planned to sell.