Wheat and rice state reserve auctions to take place in China as corn prices skyrocket
Caio Alves
Published 2020년 7월 22일
China plans to sell rice and wheat from state reserves to animal feed producers who have suffered from high corn prices, which have skyrocketed more than 20% in some areas this year, amid tightening supplies. 10 million tonnes of rice can become available in the first batch of sales, according to one of the sources related with the market.
The government is intending to use this to tame corn prices.
The idea of selling stocks comes as corn prices in China hit highs in five years, with stocks falling after years of government efforts to reduce the previously massive reserves of the cereal. Floods and cold weather in producing areas have also supported prices along the way.
Physical corn prices in Harbin, the country's main producing province, reached 2,110 yuan ($ 301.69) per tonne on Monday(July 20th), up 23% this year and the highest level since September 2015. That directly affects corn sourcing for the chinese industry as well, such as corn gluten meal processors.
Prices have prompted Chinese importers to buy record volumes of US corn, which also helps the Chinese government to fulfill Phase 1 of its trade agreement with the United States.
According to the Chinese plan, the first bach of rice sales would be traded for about 1,000 yuan per ton, according to one of the sources, which would be less than half the current market price.
Rice would be sold through state-owned companies directly to feed manufacturers, as opposed to rice sold from reserves at regular auctions, to the broader cash market.The only problem is that it may not last as long as corn after it has been husked based on feed producer's insight.
The main sources for the information declined to be identified due to the sensitivity of the matter. China's National Development and Reform Commission, the main decision-maker did not announce a word.
The government is intending to use this to tame corn prices.
The idea of selling stocks comes as corn prices in China hit highs in five years, with stocks falling after years of government efforts to reduce the previously massive reserves of the cereal. Floods and cold weather in producing areas have also supported prices along the way.
Physical corn prices in Harbin, the country's main producing province, reached 2,110 yuan ($ 301.69) per tonne on Monday(July 20th), up 23% this year and the highest level since September 2015. That directly affects corn sourcing for the chinese industry as well, such as corn gluten meal processors.
Prices have prompted Chinese importers to buy record volumes of US corn, which also helps the Chinese government to fulfill Phase 1 of its trade agreement with the United States.
According to the Chinese plan, the first bach of rice sales would be traded for about 1,000 yuan per ton, according to one of the sources, which would be less than half the current market price.
Rice would be sold through state-owned companies directly to feed manufacturers, as opposed to rice sold from reserves at regular auctions, to the broader cash market.The only problem is that it may not last as long as corn after it has been husked based on feed producer's insight.
The main sources for the information declined to be identified due to the sensitivity of the matter. China's National Development and Reform Commission, the main decision-maker did not announce a word.
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