950823

China seen buying wheat when domestic price riss

HONG KONG: Traders are watching the price of wheat in China, anticipating significant import purchases if the domestic price hits 2,000 yuan ($240) per tonne.

"China has already bought more than eight million tonnes of wheat for this crop year, and we expect they will buy at least another five or six million tonnes -- but when and from where?" a trader in Singapore said.

The U.S. crop year is June-May. China's is July-June. China's wheat imports for June 1994-July 1995 were close to 10 million tonnes, traders said.

About one million of the eight million tonnes booked for delivery before the end of 1995 has been rolled over from the crop year that ended on June 30, they said.

As the domestic Chinese price firms, the trader in Singapore said, China would move closer to a bulk purchase of up to 1.5 million tonnes.

Prices of domestic Chinese wheat were at their lowest in mid-June, traders said -- around 1,500 yuan per tonne in producing areas and 1,750 to 1,800 per tonne in deficit areas.

The price in the producing areas was now 1,700 to 1,800 yuan per tonne, the sources in China said.

"It (the price) is firming and I think it will break the 2,000 (yuan per tonne) mark within two or three months," a Chinese trader said. "And if it does break the 2,000 mark, China could buy at any minute."

The question of where China will go for its wheat appears to be moot. The United States has been scaling back its subsidy programme and China in the past has been a fastidious price buyer.

But traders said China had established a pattern of quietly entering the world market when domestic circumstances dictated, and had done so in 1994 with wheat and more recently with corn.

"Last year they waited and waited, hoping that if they didn't buy, the price would go down," the Chinese trader said.

"It didn't...and they eventually paid $180 (per tonne) C and F. The same will happen this year."

The Singapore trader said, "I think they will...quietly buy a big chunk, one maybe 1.5 million tonnes, just like they did with corn this month."

China earlier this month bought 1.5 million tonnes of corn, bringing to 4.5 million the total corn tonnage bought from the United States in calendar 1995. The total for the current October-September marketing year is 5.9 million tonnes, industry sources said.

Corn has been a good buy for China, at $167 to $170 per tonne C and F to Chinese ports, while the domestic corn price is about the same as that for wheat, traders have said.

The International Grains Council and the U.S. Department of Agriculture have said China will import 12 million tonnes of wheat in the current marketing year, compared with 10 million tonnes in the marketing year just passed.

The USDA has put China's wheat production at 100 million tonnes compared with last year's 99.3 million. Demand is 112 to 115 million tonnes with an estimated 15 percent of the domestic crop used as animal feed, traders and other sources said.-Reuter