October 28, 2008

          

China wheat prices stable on government auction
          

 

China's wheat prices were mostly stable in the week to Monday (October 27), supported by the government's auction of new wheat.

 

However, prices in some regions were mixed due to different consumption habits, said analysts.

 

Wheat prices in Handan in Hebei province were between RMB1,740-RMB1,770 a tonne, stable from a week ago.

 

Wheat prices in Zhengzhou in Henan province were around RMB1,760/tonne, up RMB20 from the previous week.

 

But wheat prices in Zibo in Shandong province were around RMB1,700/tonne, down RMB60.

 

The government sold 247,200 tonnes of wheat it bought earlier under the minimum purchase price programme, or 71 percent of the 346,700 tonnes it planned to sell.

 

The wheat was sold at an average price of RMB1,687/tonne, up RMB18/tonne from a week earlier.

 

As about 60-70 percent of the new wheat was bought by government warehouses or state-owned companies, farmers don't have much wheat on hands.

 

The government's grain supporting policies and higher wheat flour consumption during autumn helped to push up prices in some areas, said Li Dongfa, an analyst at commodity consultancy firm Shanghai JCI.

 

The National Development and Reform Commission said last week that the Chinese government will buy the new wheat crop in 2009 at prices 13-15.3 percent higher than that offered during the current season.

 

But prices in some areas were lower as farmers prefer to sell wheat instead of corn, the prices of which have been weaker due to a big harvest.
 

US$1 = RMB6.8569 as of October 28, 2008