July 21, 2009

Wheat prices in China's major producing areas were mostly stable in the week to Monday (July 20) but higher in some areas as traders competed to purchase the crop.

 

Prices in Zhoukou in Henan province were between RMB1,800 (US$263.54) to RMB1,810 (US$264.19) a tonne, stable from a week ago.

 

Prices in Huainan in Anhui province were between RMB1,780-RMB1,800/tonne, up RMB40-RMB60.

 

Prices in Shijiazhuang in Hebei province were between RMB1,840-RMB1,920/tonne, up RMB20-RMB30.

 

Most buyers were unwilling to raise their bids as wheat prices are already higher than the minimum purchase prices set by the government while demand remains weak.

 

Trading was very light generally, as farmers were reluctant to sell their wheat in expectation of higher prices due to higher input costs this year, while traders and processing plants weren't actively buying.

 

Wheat flour sales have been dwindling as it is difficult to preserve the flour during the hot summer while demand is usually weak during the season, said an executive with a wheat processor.

 

Wheat prices in most areas have stabilized and enterprises think they will stay at current levels for a while, according to a survey by the Chinese Grain Network.

 

Last week, the government sold 256,100 tonnes of wheat it bought under the minimum purchase prices program in earlier years, or 17 percent of the 1.5 million tonnes it planned to sell.

 

The average price at the auctions was RMB1,804/tonne, down RMB5 from a week ago.

 

Falling volumes sold during the government's auctions and lower auction prices showed the appetite for wheat is sluggish.

         

US$1 = RMB6.83 (July 21)