(Yicai Global) June 10 -- Chinese farmers are refraining from selling their wheat crop, despite a bumper harvest, as global grain prices edge up due to geopolitical tensions and higher cultivation costs. By holding out, the farmers hope to earn more, a researcher at BRIC Consulting told Yicai Global.

Affected by the international market, wheat prices in China have been creeping up since last year. Farmers are expecting prices to continue to increase and have developed a mentality of "sell early, earn less," Jiang Yan said. Farmers feel that the longer they hang onto it, the higher the prices will get, she added.

Prices in the country’s main production areas are now between CNY2,900 (USD434) and CNY3,100 per ton, said Meng Li, the chief wheat analyst of the agricultural market analysis and early warning team of the Ministry of Agriculture and Rural Affairs.

This is a 10 percent jump from the fourth quarter last year, when the price was as much as CNY3,000 (USD450), which was already a 25 percent gain from the beginning of the season. At one point in March and April this year, prices reached CNY3,300 per ton.

It looks like the minimum purchase price scheme brought in by the government in 2006 to protect farmers will not be instigated again this year, Meng said. This is the first time since the safety net was introduced that the scheme is not implemented for two consecutive years as wheat prices started to rise from last summer.

This year’s minimum purchase price was set at CNY2,300 a ton, well below the current market price.

Harvest is underway in China’s wheat heartlands. As of June 8, around 59.4 percent of the country’s wheat crop, around 12 million hectares’ worth, had been harvested, according to the latest data from the Ministry of Agriculture and Rural Affairs. This 5.1 percentage point faster than the same period last year.

Because of the latest fluctuations in supply and demand, this year’s wheat price swings will be greater than in previous years and the post-harvest selling period will be longer than usual, Meng predicted. On the other hand, due to the high prices, the proportion used for animal feed will drop significantly.

Editors: Tang Shihua, Kim Taylor