March 2, 2007

China sells 556,000 tonnes wheat in auction

China sold 556,000 tonnes of wheat in six provinces at its weekly auction Thursday (Mar 1). This constituted 56 percent of the one million tonnes that it had planned to sell.

Prices ranged from RMB1,430/tonne to RMB1,670/tonne, compared with RMB1,420-1,690/tonne in the pre-Lunar New Year holiday sale.

There was no weekly auction last week due to the holiday.

The sale is part of a series of auctions aimed at stabilising domestic wheat prices.

The wheat was bought by state warehouses last year under the minimum purchase prices policy.

Designated state-owned warehouses in six major wheat-growing provinces had bought wheat at minimum purchase prices of RMB1,380-1,440/tonne from June to September 2006.

The central government was hoping to protect farmers' incomes with the purchases.

China Grain Reserves Corp bought 40.69 billion kilogrammes of wheat at the minimum purchase prices last year.

In November, grain trading centres in the provinces started selling the wheat to put a cap on high cash prices stemming from tight supply.