February 16, 2011

China's corn auction sales gain pace

China sold a total of 160,034 tonnes of corn from state reserves on Tuesday (Feb 15), the first weekly sale after Lunar New Year holiday.

Sales in major consuming areas totalled 147,885 tonnes at an average price of RMB1,927 (US$292.1) per tonne. The price was 1.5% higher than at the previous auction on January 25.

Only some selected big feed mills are allowed to bid for state corn reserves.

Domestic corn prices picked up after the week-long holiday break, supported by a price rally in domestic wheat prices sparked by worries of widespread drought in China's major wheat areas in the northern plain.

Sales in the four northeastern provinces, also the country's corn belt, remained thin at only 12,149 tonnes as the government offered less for sale. Farmers there were also selling their harvest to the market.

The government has been selling corn from its temporary reserves since 2008/2009, with a total of 51 million tonnes of corn sold, according to industrial data.

The sale was also part of Beijing's efforts to cool rising domestic prices. China has sold a total of 26 million tonnes since April 2010, according to sources.