June 15, 2011

China's feed mills showed less interest in bidding for state feed wheat reserves at weekly government auctions on Tuesday (Jun 14) amid ample supplies from a projected bumper harvest.

Only 20,438 tonnes or 6.8% were sold out of 300,620 tonnes of feed wheat on offer. The auction brings total sales to 760,763 tonnes since the government initiated feed wheat auctions in late March to help ease tight corn supply.

Domestic feed mills are using more wheat as a raw material to cope with rising costs of corn, whose prices are about 15% higher than wheat in most corn consumption areas in China.

This week, the pace of wheat harvest accelerated, with 65% of wheat crop harvested. Drought earlier caused minor damage to the wheat crop while early-season rice in some provinces was damaged, according to the National Bureau of Statistics.

China restricted bidding to some big feed mills and capped purchase volumes. The sales do not reflect a true picture of demand at feed mills.