November 1, 2011


China's wheat prices unchanged on corn weakness, high stocks


Wheat prices in China's major producing areas were stable in the week to Monday (Oct 31), as weaker corn prices and high inventories at flour mills put pressure on prices, but the market was underpinned as farmers are reluctant to sell.


Prices in Dezhou in Shandong province, were RMB2,060 (US$324)/tonne, unchanged from a week earlier.


In Shijiazhuang, Hebei province, prices were around RMB2,180 (US$343)/tonne, also unchanged.


Wheat, which is widely used in animal feed as a replacement for corn when corn prices are high, has come under pressure after a bumper corn harvest brought corn prices down by around 15% since record levels reached in end-September.


Flour mills now hold bigger wheat inventories than the same period last year, data from the State Grain Administration showed.


Average retail wheat flour prices in China were unchanged at RMB5.15 (US$0.81)/kg in the two weeks to October 23, according to the Ministry of Commerce.


Serious overcapacity in the flour milling sector is leading to intense competition in prices, traders said.


Wheat prices have increased 3%-4% in the last two months, but flour prices have risen only 1%-1.5%, traders said.


Wheat prices are expected to remain stable in the coming months due to easing consumer-price inflation, analysts said.

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