Wheat auctions featured less trading volume and lower close rate in Nov. than the month before, but trading price picked up because of the government’ measures to prop up grain price.
918,300 MT wheat was sold by auction by Nov. 26, a drop of 7.11% from the month before, down 85% on the year-on-year basis. The decreased trading volume was a result of flourmills’ soft demand and the government’s raise of wheat supply price.
In addition, sales of imported wheat and wheat procured at the protective price registered 26,700 MT and 959,100 MT in Nov., below the 60,500 MT and 998,300 MT sold in the month before.
By Nov. 26, sales of wheat procured at the protective price during 2006 ~ 2008 totaled 63.7706 million MT, accounting for 56.8% of the total procured volume. 853,700 MT procured in 2008 and 25.4708 million MT procured in 2007 were sold, 0.96% and 87% of the procured volume respectively. Wheat procured in 2006 had been basically sold out.
Since Sep. of 2007, about 1.2501 million MT imported wheat has been sold, but stock remains high.
It is estimated that the nation’s wheat stock is about 73.2 million MT at present.
Wheat auction price averaged RMB1,667/MT in Nov., down 0.19% from the month before but up 9.8% on the year-on-year basis. Considering the impact of US currency appreciation on the Chinese currency, wheat auction price actually rose 3.78% in Nov. over the month before and 32.51% on the year-on-year basis, close to the cost of production. The government’s economy-stimulating measures and active financial policy eased the pressure on grain price.
The government is to raise the starting price of new wheat in the auction market by RMB40/MT in Dec., setting RMB1,560/MT for mixed wheat of third grade and RMB1,660/MT for white wheat.
Due to falling corn price and climbing wheat price, wheat consumption for feed and industrial uses has decreased substantially, resulting in a high wheat stock.
The close rate of wheat auctions was 63.89% in Nov., below the 79.3% in the month before and the 72.17% in the same period of last year. Wheat sales were affected by global deflation in Nov. The close rate of auctions is predicted to go steady in Dec.
