March 30, 2011

China sells 36% of feed wheat reserves

China's government sold 108,991 tonnes of feed-grade wheat reserves, 36% of the total volume of 300,990 tonnes offered at Tuesday (Mar 29)'s auction.

Before the sale, analysts said the government might hold about 1.64 million tonnes of feed wheat, which was harvested in 2009, but excessive rains during harvest had hurt the quality.

The feed wheat was sold at an average price of RMB1,791 (US$273) per tonne, according to the bidding results.

"Many feed mills are interested in the wheat because prices are quite low, but restrictions have limited mills from bidding too much," said one feed mill official, which joined the bidding.

Beijing, eager to tame food price rises, has limited the numbers of feed mills as well as their bidding volume at weekly state corn auctions.

On Tuesday, only 140,775 tonnes of corn were sold out of nearly 1.2 million tonnes on offer, with the average price at RMB1,818 (US$277) per tonne for stocks stored in the major consuming areas.

The government has sold out nearly 53.50 million tonnes of corn from state reserves since 2008, according to sources. Analysts believe that state corn reserves have fallen to under 10 million tonnes or less than the country's one-month consumption.