BEIJING, July 4: China’s state grain stockpiler has stopped buying wheat in the country’s main producing area to cool prices boosted after rains damaged crops.
The world’s top consumer of the grain has ramped up imports in the wake of the unseasonal rains in May, but any easing in local prices could curb appetite for wheat from overseas.
China Grain Reserves Corporation (Sinograin) said it had suspended stockpiling from the country’s top wheat region of Henan, which produces about 31 million tonnes of wheat or 25 percent of the country’s total output.
Sinograin’s purchases from farmers in past weeks helped drive domestic prices to a six-month high before stabilizing in the last few days, analysts said.
‘While domestic prices stabilize, we expect imports to take a brief break,’ said an industry source at an official think-tank.
Sinograin has been ramping up imports, with the U.S. Department of Agriculture (USDA) saying the stockpiler made a purchase of 360,000 tonnes of U.S. Wheat, the largest volume in three months. Although industry sources said the volume could have been closer to 600,000 tonnes.
The transaction was the third large-scale purchase by Sinograin so far in the year, bringing total imports to about 2.1 million tonnes, according to analyst estimates.
Besides buying U.S. Wheat, state-owned trading company COFCO has also purchased 300,000 tonnes of Australian wheat this week to profit from rising domestic prices.
U.S. Soft red winter wheat for August shipment, at about $315 CIF, was about 10 percent cheaper than domestic wheat, said the China National Grain and Oils Information Center (CNGOIC).
Rains have damaged 11 million tonnes of wheat in top growing area of Henan, accounting for about 8 percent of the annual output in the world’s top producer of the grain.
Wetter-than-usual weather hit wheat harvests in May and early June in China, which accounts for about a fifth of global production and consumption of the grain, with the state think-tank revising down its 2013 wheat harvest forecast to 120.63 million tonnes from 121.9 million tonnes. (agencies)
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