August 29, 2006

  

China to auction 500,000 tonnes of corn

 

 

China's northeastern Jilin province plans to auction 500,000 tonnes of corn along with 1 million tonnes of rice Sep 14-15, nearly matching in scope an equally large auction that it held half a year ago, a local trader said Tuesday (Aug 29).

 

The corn and rice will be from old reserves with a history of at least two years, said Wang Shiliang, a trader at Jilin Grains Centre under Jilin Grains Bureau.

 

Base prices would be set one day before the auction, he added.

 

In February, Jilin Grains Centre held an auction for 1.24 million tonnes of old corn and 540,000 tonnes of old rice.

 

Bids for the corn ranged from RMB1,110/tonne to RMB1,310/tonne, according to the centre.

 

Industry estimates indicated more than 1 million tonnes was sold.

 

Jilin is China's largest corn-producing province.

 

"The (upcoming) auction will have a limited impact on the market, as the rice and corn to be auctioned are aged and poor in quality compared with newly harvested (grains)," said Wang.

 

Corn prices, quoted around RMB1,200/tonne-RMB1,440/tonne (US$150.7-US$180.8) across China last week, have shown signs of picking up recently, as demand for feed is expected to increase with prices of pork and poultry rising, according to local analysts.

 

The rice market has been relatively stable due to a minimum purchase price of RMB1,400/tonne set by the government for early long grain rice harvested in major producing provinces this year.

 

"The imported wheat is for September delivery but around 18,000 tonnes of the purchase has in turn been sold to an international trading house, Glencore International AG, at around US$193/tonne, cost and freight," the official told Dow Jones Newswires.

 

The commerce ministry official said margins are tight in sales to end-users of wheat such as flour manufacturers within the country and trading companies are now exploring options of resale to their counterparts elsewhere.

 

"International (wheat) supplies are tight, prices are on the rise and it makes sense to buy now and trying selling it off for a profit before taking deliveries," said the official.