June 15, 2011

China on Tuesday (Jun 14) sold 97,447 tonnes of corn from state reserves as domestic physical corn prices hit a record, bringing government sales so far this year to 2.86 million tonnes.

Sales since January 2010 totalled 30.2 million tonnes. The total amount of corn sold from state reserves is less than China's weekly corn consumption of about 3.3 million tonnes, according to industry data.

Record corn prices, with benchmark Dalian prices now quoted at RMB2,300 (US$355) per tonne, were blamed for record pork prices, which drove the country's overall inflation to 34-month high in the year to May and a large volume of substitutions with wheat by feed mills in some areas.

Traders estimated that Sinograin, which manages central government reserves, has purchased more than 10 million tonnes of corn from the domestic market to replenish reserves since late last year. The company in March bought one million tonnes of corn from the US.

As Beijing restricted bidding volumes and the numbers of feed mills for the bidding, the sales do not reflect actual demand.