December 19, 2006

China to auction sixth batch of grain to cool rising prices

China plans to sell 1 million tonnes of wheat and 500,000 tonnes of rice from its state reserves this week to keep domestic grain prices from rising further, the China National Grain and Oils Information Centre said.

This would be the sixth such auction for wheat and fifth for rice since November.

The auctions have so far been able to contain the surges and the prices have stabilised, said Beijing Orient Agribusiness Consultant adding there might not be much of a decline, as next year's supply remains uncertain.

The country's state reserves sold 4.58 million tonnes of wheat in previous auctions, according to the official Xinhua news agency. The stocks were bought by the reserves under the minimum-purchase price programme, which was introduced in 2004 to boost farmers' income.

Chinese Premier Wen Jiabao last week ordered government departments to crack down on hoarding and ease supply bottlenecks to cap surging food prices that threaten to fan inflation and create social unrest.