China sells almost all corn at weekly auction

China sold almost all the corn on offer at weekly government auctions on Tuesday (May 18) in the northeast, with bidding prices higher than in previous auctions despite the government restricting bidding to feedmills only.

Further imports by China will depend on whether Beijing can tame runaway domestic corn prices, traders said. Higher domestic prices had prompted companies to book nearly half a million tonnes from the US.

The State Grain Administration, in a move to cool rising domestic prices, said the country had an adequate supply of corn and the government would release its strategic reserves after temporary reserves were sold out.

"It seems the market still has doubts on whether the government has enough supplies," said analyst Feng Lichen.

On Tuesday, the government sold 796,700 tonnes out of 799,400 tonnes on offer in the northeast at an average price of RMB1,751 (US$256.5) per tonne, up 0.98% from the previous auction two weeks ago.

Corn processors, which are not allowed to bid at weekly government auctions, have also raised their prices offered to farmers so as to source enough corn.

"The market is anticipating more shortages and we expect such sentiment will last until June," said one analyst with an official think tank.

Feng said Beijing also set bottom bidding prices too low, or at RMB1,580 (US$231.4) per tonne, far below current physical prices, which prompted many to bid for the cheap supply.