July 30, 2009

China completed its second round of state corn reserve auctions on Tuesday (Jul 28) with modest increases in sales, which was part of Beijing's effort to stabilise prices ahead of the November harvest.

China sold 928,300 tonnes of corn on the second bidding day, or 48 percent of the planned release, bringing the total sales to 1.67 million tonnes after last week's auction.

The sales were transacted at an average price of RMB1,590/tonne, which was slightly above the original offer price of RMB1,550/tonne, the official National Grain & Oil Trade Centre (NGOTC) said.

In a bid to ease shortages in some regions and cap rising prices, China plans to sell two million tonnes of corn from state reserves each week which began last Tuesday (Jul 21) but it did not mention the exact duration of the biddings.

Currently, China holds an estimated 40 million tonnes of corn reserve.

According to NGOTC, Jilin province sold 355,800 tonnes of corn for the second round of state auctions on Tuesday, which was more than double that of last week. The centre added that neighbouring Heilongjiang province received bids of 23.69 percent, or 71,100 tonnes, an increase of 17,900 tonnes from the first round of bidding. Meanwhile, the auction in Liaoning received bids for 346,800 tonnes of corn, which accounted for 68.86 percent of the total volumes on offer.

Earlier, analysts had expected lukewarm procurement interest for the second round of corn auctions, citing cheaper spot prices.

During the first auctioning of state reserves last week, China sold 745,900 tonnes of corn, which was less than 40 percent of the planned release.