Wheat prices remain elevated but lack direction amid auctions

Wheat prices continue to fluctuate at elevated levels with Hubei prices falling 12 yuan per ton last week to 3118 yuan per ton, which is essentially unchanged over the past two months.

Demand is still described as weak the period after the Chinese New Year usually sees seasonally weaker demand.

Recent auctions also haven’t led to any changes in market direction. The national auctions have seen 100% of available stocks being purchased at lower prices but this discount to the cash market is due to extra costs associated with loading wheat out of the government stocks and additional freight costs to the end user.

In addition to the national auctions, there are also a number of local auctions. Last week Hubei province auctioned 17k tons of grain with 60% being purchased by the market. This includes the 2020 crop at an average price of 3135 yuan per ton and the 2022 harvest wheat at 3140 yuan per ton.

Auctions further north in Hebei and Shandong provinces also saw prices around 3160 to 3200 yuan per ton.