January 24, 2011

China resumes state corn, soy auctions

China will continue to hold corn and soy auctions this week, and at the same time buy for state reserves from the domestic market.

Beijing will offer a total of 1.8 million tonnes of corn and 300,000 tonnes of soy on Tuesday (Jan 25). The auctions, restricted only to some big companies, aim to boost supplies and cool food prices ahead of the Lunar New Year in early February.

Some major corn processors have been ordered to halt purchasing from the market so as to let the government make purchases to refill its dwindling stocks.

Traders said Sinograin, which manages the central government reserves, plans to buy an initial volume of 8-10 million tonnes. But its offer prices, at about RMB1,800 (US$273)/tonne to farmers, was lower than market prices to avoid driving up inflation.

The government has sold 26.26 million tonnes of corn from state reserves since April 2010.

The public auction for soy has so far attracted no bidders. The government last week agreed to sell 350,000 tonnes of soy directly to crushers and 450,000 tonnes of rapeseed oil at a much lower price to compensate crushers hit by the government's cap on retail edible oil prices.