This week's grain auctions

Is China running out of corn? Nobody knows since corn reserves are a state secret (see yesterday's post).

On November 16, over 300,000 metric tons of corn from reserves were offered for sale at auctions in four northeastern provinces. Only about 30% of the corn was actually purchased--this is in contrast with the situation last summer when all corn put up for auction was sold.

Corn was mostly from last year’s crop but included corn from as far back as 2006.
Here's what was offered by year the corn was originally purchased:
4,102 mt from 2006 (99.7% sold at 1640 yuan/mt)
50,100 mt from 2007 (37% sold at 1629 yuan/mt)
44,400 mt from 2008 (30% sold at 1569 yuan/mt)
202,400 mt from 2009 (37% sold at 1617 yuan/mt)

Interestingly, Jilin, the largest corn-producing province, only put up 20,000 mt and nearly all of it sold. In Heilongjiang and Inner Mongolia, larger amounts were offered and less than one-third sold. Maybe there is a spot shortage in Jilin.

In Heilongjiang 141,400 mt (99,200 from 2009) was offered but only 14% sold at prices from 1560 to 1650 yuan/mt.
In Inner Mongolia 109,000 mt (30,900 mt from 2008 and 61,000 mt from 2009) was offered and 31% sold at 1640 to 1690 yuan/mt.
In Jilin 20,500 mt was offered and 99.3% sold at 1660 to 1740 yuan/mt.
In Liaoning 30,000 mt of 2009 corn was offered and 17% sold at 1600 yuan/mt.

Grain officials also announced 1.5 mmt of interprovincial transfers of corn from central reserves for this week. About half of that corn was from northern regions: Beijing, Hebei, and Shanxi. The rest was in smaller lots in southern provinces.

Auctions of 99,600 mt of japonica rice were also held on November 18 in seven provinces, but only 14,000 mt sold. This grain also was from years 2006 to 2009. In most provinces all rice offered was sold, but only 7% of the rice offered in Heilongjiang sold and 11% sold in Zhejiang.

The location of reserves is still an issue. It's possible for regional imbalances in supply-demand to occur. The list of rice being offered included a column indicating whether there was a dedicated rail line (set aside by authorities) for transporting the grain. Nearly all of the Jilin warehouses had a dedicated rail line and about half of the Heilongjiang warehouses did; other provinces did not.

Another indicator is whether rice was stored in the open (not in an enclosed warehouse). About half of the Heilongjiang and several Tianjin storage warehouses were in the open.