January 8, 2007

China sells 527,800 tonnes of wheat

China sold 527,800 tonnes of wheat in five provinces through public auctions Friday (Jan 5), with prices ranging from RMB1,400-1,570/tonne, the National Grain & Oil Trade Centre said.

The auctioneers planned to sell about 750,000 tonnes of wheat Friday.

The auctions were part of the country's regular sales of wheat bought by the state warehouses under the minimum purchase price last year.

To protect farmers' incomes, China's central government designated state-owned warehouses in six major wheat growing provinces to buy wheat at minimum purchase prices of RMB1,380-1,440/tonne from June to September.

"The rising supply may not weigh on cash prices as the auctions have already been factored in cash values," said Pan Wei, a wheat analyst at Dalu Futures Co.

"Market participants have become accustomed to the regular auctions and they know that the government's purpose is to stabilise prices, not let them fall sharply," Pan said.

China will hold auctions again Wednesday to sell 750,000 tonnes of wheat.

More than 5 million tonnes of wheat have been sold through public auctions since November.