March 17, 2005

China sold about 112,000 million tonnes wheat reserve at RMB1,520/tonne

China Grain Reserves Corp. Wednesday sold about 112,000 tonnes or 70 percent of the 160,000 tonnes of old wheat it put up for sale from state reserves, an official with auctioneer Anhui Grains Wholesale Market said Thursday.

The wheat was sold at an average price of RMB1,520/tonne which was slightly higher than current market prices in Anhui of RMB1,480-RMB1,500/tonne, the official said, adding wheat sold from state reserves was of better quality.

The floor price for the sale had been set at RMB1,460/tonne.

Meanwhile in Shandong, a planned sale of 90,000 tonnes of old wheat from state reserves didn't receive much interest because the auctioneer had set the floor price too high, local traders said.

"The floor price for the auction in some warehouses was set at RMB1,610/tonne, RMB50/tonne higher than the market price of new wheat," a trader said.

Traders and analysts said local wheat prices have been under pressure since the announcement of these auctions.

Wheat prices will likely come under further pressure as more such auctions are expected, according to some analysts.

Chinese provinces hold state auctions from time to time to get rid of old stocks which can then be replaced with new stocks.