March 29, 2011

China to sell feed wheat amid corn shortfall 

China will release state reserves of wheat whose quality has been downgraded for use in animal feed production, marking the first such sale of wheat reserves to feed mills amid tight domestic corn supplies, analysts said Monday (Mar 28).

"The feed wheat sales, coupled with corn imports seen totalling between 3-4 million tonnes, are likely to offset corn supply pressure," analysts said, adding that total feed wheat sales by the government would be 1.64 million tonnes.

Beijing will offer the first batch of 300,000 tonnes of feed wheat on Tuesday. In addition, state corn reserves totalling 120 million tonnes and food-grade wheat of 683,000 tonnes would be offered as well.

Qualified feed mills are required to bid for the state corn and feed wheat with a total volume not larger than their 30-day consumption, according to the bidding document.

The feed-wheat sales come after Dalian corn prices hit their highest level last month amid anticipation of corn shortages at home and low state reserves as Beijing tries to tame food price rises. Analysts estimated that state corn reserves have fallen below a one-month consumption level, or 10 million tonnes.

Traders generally say that China was believed to be the buyer behind the sixth-largest single-day corn sale ever released by the USDA on Friday.