December 19, 2006

China acts to stabilise grain prices

China Grains Trading Centre held its fifth wheat auction under the "minimum price purchasing" programme on Dec 14, with 830,000 tonnes wheat sold.

The auction is part of a series of measures by various ministries such as China's Developing and Reforming Commission and the Ministry of Finance to offload part of the interim state reserves to stablilise rising prices.

In the second half of November, soaring industrial demand and the holding back of grains by farmers in hopes of higher profits have led to price increases in wheat, corn and soybean. Due to the rising costs of raw materials, edible oil prices in the country rose 6 percent over October.

China announced new rules on grain auctions in early December, announcing that it intends to stablise grain prices and keep it within reasonable limits.

The government has held four auctions since late November, selling the grains from the Interim State Reserves bought as part of the minimum purchase price programme.

With more grains being released into the market, prices will gradually stablise, the Developing and Reforming Commission said.