November 20, 2010

China to sell soy, vegetable oil reserves to tame prices

China will sell soy and vegetable oils from state reserves at weekly auctions starting next week, in a move to help boost supplies and stabilise prices, the State Administration of Grain said Friday (Nov 19).

The sales are in addition to the current weekly offerings of 4.5 million tonnes of wheat, 2.1 million tonnes of rice and 1.8 million tonnes of corn, the administration said.

Sales of vegetable oils, mainly rapeseed oil, could help meet demand and cap a price surge during the peak consuming season in the months preceding the New Year holidays.

One trader said about 100,000 tonnes of rapeseed oil will be released every week.

"The sales may prevent a price spike as demand is quite good because of the approaching holidays," an analyst said.

The Heilongjiang government plans to release 250,000 tonnes of soy to local crushers, but crushers may not be interested as the quality of the soy has deteriorated after being stored for two years, said Liang.

Beijing vowed to tame inflation and will intervene to control consumer prices that are rising too fast, after food price rises drove the country's inflation to a 25-month high in October.

"We are not interested in soy auctions. We prefer imports whose quality is better," said one manager with a crusher in Shandong.

The Grain Administration will announce the volumes later, but vegetable oil will be sold to some big companies designated by the government.