WHEAT prices in China's major producing regions were mostly stable in the week to Monday, supported by regular auctions from the government.
Wheat prices in Laizhou in Shandong, a major producing province, were at CNY1,700-CNY1,720 a metric ton, stable from a week ago.
In Xuzhou, in Jiangsu province, prices were unchanged at around CNY1,650/ton.
Wheat prices are likely to go up later this month on increased flour consumption, helped by the year-end holidays, said analysts.
Prices have remained stable in the last few weeks as the government has purchased large amount from the market as state reserves, and releases them regularly to the market to meet the demand.
The government undertakes this exercise to minimize chances of a sharp fluctuation in prices.
Last week, the government sold 185,284 tons of wheat it bought under a minimum purchase prices program, or 53% of the 351,890 tons it planned to sell last week.
The average auction price were mostly higher than the previous week, with the average price of wheat auctioned in Henan province CNY22/ton higher at CNY1,696/ton. This helped support prices in the cash market.
Going forward, China's plan to reduce export taxes on wheat may have a minimal impact on prices because the government will still control exports of the commodity through quotas, said Hai Yang, an analyst at Zhengzhou Esunny Information & Technology Co.
China will either remove or reduce export taxes of several varieties of grains from Dec. 1, the Ministry of Finance said last week.
Wheat export tariffs are to be cut to 3% from about 20%, it said.
Meanwhile, the government aims to increase wheat prices steadily through the weekly auctions, after the hike in the minimum wheat purchase prices for 2009, said China Zhengzhou Grain Wholesale Market in its note.