September 3, 2007

 

China wheat prices stable, supported by minimum purchase price
 

 

China's wheat prices were mostly stable in the week to Monday (Sep 3), supported by minimum purchase prices.

 

The amount of old wheat sold during the government's weekly auction held Thursday increased from a week earlier due to higher prices of new wheat. The higher amount sold helped, in turn, to keep the rise of new wheat prices under check.

 

Ex-factory wheat prices at state grain houses in Zhengzhou - the capital city of the major wheat-producing Henan province - were between RMB1,520/tonne and RMB1,540/tonne, steady from a week ago.

 

The enter-factory prices of new wheat at state grain houses in Zhengzhou were about RMB1,520/tonne, unchanged from a week earlier.

 

Ex-factory wheat prices at state grain houses in Jinan, the capital city of Shandong province, were about RMB1,560/tonne, steady from a week ago. Shandong province is also a major producer of wheat.

 

The enter-factory prices of new wheat at state grain houses in Jinan were about RMB1,560/tonne, unchanged from a week earlier.

 

The purchase amount of new wheat slowed down in most wheat producing regions as new wheat prices were higher than the minimum purchase prices, according to the National Grain & Oil Trade Centre.

 

As of Aug 25, grain companies in China's 11 major wheat-producing provinces have bought a total of 38.4 million tonnes of new wheat since the harvest season started in May.

 

China set the minimum purchase price for white wheat at RMB1,440/tonne in 2007 and RMB1,380/tonne for red and mixed wheat, both unchanged from the price floor set last year.

 

The government holds regular auctions to sell wheat bought under the programme.

 

On Thursday, China sold 791,700 tonnes of old wheat it bought under the minimum purchase price programme, 54 percent of the 1.45 million tonnes it planned to sell.

 

It sold 757,900 tonnes of old wheat on Aug 23.

 

Wheat prices will likely remain at current high levels in coming weeks as farmers are reluctant to sell amid expectations of higher prices, while grain reserve houses may continue to buy new wheat to replace old wheat, according to the China Grain Network.