August 25, 2008

 

China wheat prices stable from a week ago

China's wheat prices in major producing areas were stable in the week to Monday, with upside limited by recent gains.

 

Wheat prices in Zhoukou in the major producing province of Henan were around RMB 1,620 per tonne, stable from a week ago.

 

Wheat prices in Zibo in Shandong province, another major producing area, were between RMB 1,700/tonne and RMB 1,720/tonne, also stable.

 

Although flour demand is high ahead of the Mid-Autumn Festival in mid September, wheat prices have little room to rise after an earlier jump, said Hai Yang, an analyst at Zhengzhou Esunny Information & Technology Co.

 

Wheat prices have risen to well above minimum purchase prices, which are RMB 1,540/tonne for white wheat this year and RMB 1,440/tonne for red and mixed wheat.

 

Many state-owned grain reserve warehouses have almost completed their purchases, and are unwilling to raise bids.

 

As of August 10, grain warehouses purchased 50.45 million tonnes of new wheat from farmers, up 15.25 million tonnes on-year, according to data from the National Grain & Oil Trade Center.

 

State-owned grain warehouses have bought 44.64 million tonnes of the new wheat, up 13.33 million tonnes on year, it said.

 

Last week, the government sold 168,000 tonnes of the wheat it bought under the minimum purchase price programme in previous years, or 88 percent of the 191,800 tons it planned to sell.

 

The average price was RMB 1,585/tonne, down RMB 8/tonne from the previous week.

 

The government also sold 3,498 tonnes of imported wheat from its reserves, or 0.4 percent of the 928,198 tonnes it planned to sell.

 

Analysts said wheat prices are likely to remain mostly stable ahead of government auctions of new wheat, likely to start after the minimum purchase price programme wraps up in late September.