November 29, 2010

China's first soy release to hit the market soon

China will auction 300,000 tonnes of soy from state reserves on December 3, its first release of soy this season, China National Grains and Oils Centre (CNGOIC) said Friday (Nov 26).

China's government has been selling other crops including rice, wheat and corn as well as vegetable oils to put pressure on food prices and stave off inflation, which was running at 4.4% in October, a 25-month high.

The soy will be sold from temporary storage in Beijing, Tianjin, Hebei, Shandong and Shaanxi, CNGOIC said.

The government often uses stockpiling as a tool to regulate market prices, buying when prices are low and selling when prices are high.

State warehouses will release 8.5 million tonnes of grain next week to guarantee supplies and restrain price increases, the National Development and Reform Commission said earlier on Friday.

Those sales will include 2.1 million tonnes of rice, 1.8 million tonnes of corn and 1.06 million tonnes of wheat from November 30 to December 2, CNGOIC said.

The NDRC said it had already released 25.5 million tonnes of grain into the market since the end of October, including 5.4 million tonnes of corn, 1.35 million tonnes of wheat and 6.3 million tonnes of rice.

The government also offered 100,000 tonnes of rapeseed oil at an auction on Friday but sold only 70,300 tonnes.

China's three big commodity exchanges in Dalian, Zhengzhou and Shanghai have also been helping tackle price rises by raising trading margins on commodity futures, a move to push less serious investors out of the market. Dalian announced its second increase in trading margins within a fortnight on Friday.