May 26, 2004

China Tianjin Cancels Wheat Auction As New Crop Seen Bigger

China's Tianjin province has canceled a wheat auction planned for May 28, traders in China said Wednesday.

The cancellation comes at a time when China's winter wheat harvest is in full swing, fueling speculation that harvest pressure could have led to the decision.

"The auction could have been canceled because new crop wheat production (appears) better than expected," said a trader from a grain trading company in Beijing.

He noted that Henan, the top wheat producing region in China, also canceled a wheat auction originally scheduled for late May. Auction officials were not available for immediate comment.

Since mid-March, China's provincial governments have held a number of wheat auctions as part of their attempts to keep rising prices under check by increasing supply.

Preliminary reports about the winter wheat harvest have turned out better than earlier expectations, traders said.

As of May 25, farmers in Henan are said to have harvested 886,670 hectares of wheat, or about 18% of the total area. Winter wheat production in Henan this year could reach a record high, traders in Henan said.

According to the original notice from the Tianjin Grain and Oils Wholesale Market, which was to conduct the auction, China Grain Reserves Corp., or Sinograin, had authorized the sale of about 200,000 metric tons of imported Canadian wheat from state reserves.

At an earlier auction in mid-March, Sinograin sold 200,000 tons of imported wheat from state reserves in Tianjin at an average price slightly above 2,000 yuan/ton ($1=CNY8.28).