August 1, 2003



Higher Wheat Prices In July As Concerns Increased Over China's Lower Output And Stocks

Domestic wheat prices in China rose in July amid concerns over lower output and stocks, according to China-based traders and analysts Thursday.


Prices of normal quality wheat in Henan, China's top wheat producing province, were quoted at RMB 1,080-1,110 /ton Thursday, up RMB 30-40 /ton from prices July 1, said traders in Zhengzhou, the capital of Henan.


Prices of higher quality wheat in Henan are at RMB 1,180-1,220/ton Thursday, RMB 60 higher than July 1, they said.


In Shandong province, another major wheat producing region, wheat prices are unchanged to RMB 10 higher from the start of July, around RMB 1,090-1,100 /ton.


In Anhui province, wheat prices are up around RMB 20 at RMB 1,040/ton.


In Guangdong province in southern China, wheat prices have risen about RMB 10-20 in the past month to RMB 1,220-1,240 /ton, said traders.


The wheat markets in China are mostly firmer in July, an extension of the rally after the harvest of new crop wheat. The buyers have been active in procuring wheat, but the lower output and floods in some provinces have led to cautious farm selling," a grain analyst from a local brokerage house in Henan province said.


Production of winter wheat, harvested in May and June, is pegged around 80.60 million tons, down 4.5% from output in 2002, and the fourth consecutive yearly decline, said traders and analysts.


"The production is lower due to lower acreage, as the Chinese government (has been) encouraging farmers to reduce the acreage of wheat and corn and increase the acreage of cash crops with better economic returns," said a trader from China National Cereals, Oils & Foodstuffs Import & Export Corp.


In the second quarter of 2003, prices of wheat in China rose by 3.2% compared with the same quarter of 2002, traders said, citing data from China's National Bureau of Statistics.