November 16, 2010

China restricts feed millers' corn buying volumes

The Chinese government has enforced limits on buying volume by feed mills at weekly state corn auctions due to thin stocks while snowfall in the major corn areas in the northeast have slowed sales of new crops.

The latest restriction, effective on Tuesday (Nov 16), will limit bidders to no more than 15 days of consumption and their total purchases in a month must not exceed their actual one-month consumption.

The restriction applies to bidders of state stocks in provinces in the north and south major consuming areas, where prices have recently risen due to tight supply. The government last week released its strategic reserves for sale in these provinces.

Snow in most areas in the northeast, the country's corn area, have caused farmers to slow sales, said the China National Grain and Oils Information Centre (CNGOIC).

Processors in Shandong, where most are located, are also raising prices to try to source more corn from farmers, whom are reluctant to sell in anticipation of even higher prices, said the centre.

The State Grain Administration recently ordered checks on companies involved in grains trading and enforced limits on storage in efforts to cool food prices, which have pushed annual inflation in the country to a 25-month high in October.