June 24, 2011

Wheat auctions in China fail to attract buyers

China sold a combined 46,644 tonnes of wheat from state reserves Wednesday (June 22) at auctions in Anhui and Henan Provinces, the lowest level this year in the weekly 4.5 million-tonne offer of the grain.

So far this year, the government has sold about 12 million tonnes of wheat from state reserves, roughly 10% of China's full-year demand, according to calculations by Dow Jones Newswires.

The weekly offer is aimed at ensuring market supply, as flour mills have shifted their focus to newly harvested wheat.

Sufficient wheat reserves and huge sales at the auctions have held wheat prices in check.

Corn prices, meanwhile, have risen about 15% this year due to the combination of strong demand and the much smaller size of the government's weekly offer.

China is offering only about 500,000 tonnes of corn a week, with a handful of feed mills qualifying for participation. So far this year, it has sold only 2.97 million tonnes of corn in state auctions, compared with the weekly corn demand in the country of about 3.6 million tonnes.

China is the world's largest wheat grower.