December 8, 2006

 

China auctions 635,671 tonnes of wheat on December 7

 

 

China auctioned 635,671 tonnes of wheat Thursday (Dec 7), auctioneers said.

 

In a statement on its website, Zhengzhou Grain Wholesale Market, one of the auctioneers appointed by China's grain authorities, said it auctioned 241,571 tonnes of summer-harvested wheat at an average price of RMB1,501 a tonne, with bids ranging between RMB1,400 and RMB1,590/tonne.

 

Zhengzhou Grain Wholesale Market had planned to sell 300,000 tonnes of newly harvested wheat Thursday.

 

Zhengzhou is the capital of Henan province.

 

Anhui and Hebei provinces sold a total of 394,100 tonnes in a combined auction Thursday, with bids ranging from RMB1,400 to RMB1,670/tonne, said Anhui Grain Wholesale Market, another government-approved auctioneer.

 

The two provinces had originally planned to auction a combined 514,000 tonnes of wheat.

 

The auctioneers did not provide a reason for the lower volume sold.

 

The three major wheat producing provinces of Hebei, Henan and Anhui are in northern and central China.

 

To protect farmers' incomes, China's central government designated state-owned warehouses in six major wheat growing provinces to buy wheat at minimum purchase prices of RMB1,380-1,440/tonne from June to September, so that wheat prices would not slump after a good harvest this year.

 

Wheat purchases by state-owned warehouses during this period accounted for nearly half of China's winter wheat production in 2006, which effectively makes the government a monopoly supplier in the market.

 

The government releases its stocks to the market through auctions, with the first one held Nov 3.