BEIJING, April 2 (Reuters) - China released 2 million tonnes of rice from state reserves for sale to feed producers this week to bolster supplies of feed grains amid elevated corn prices, three sources close to the matter said.
Corn prices hit record highs in China earlier this year as dwindling stocks and reduced output raised concerns over supplies.
China on Wednesday sold between 1.4 million and 1.5 million tonnes of rice - about 70% of the total volume put up for sale - for feed use, said two sources briefed on the matter.
This rice would be sold through state companies directly to feed makers, unlike the rice sold from reserves in regular auctions to the broader market.
"There will be more such auctions coming. The government will keep releasing (rice and wheat) until corn prices are tamed," said one of the sources.
The state had already sold some rice in private auctions for feed use late last year, the source said, after a government plan to release wheat and rice to tame corn prices.
China has also sold close to 5 million tonnes of rice from reserves this year, in regular and public auctions, some of which went to the feed market, said Qin Yuyun, head of the National Food and Strategic Reserves Administration's reserves division.
So far this year the government has been auctioning about 4 million tonnes of wheat and 1.6 million tonnes of rice a week from reserves. The volume of wheat sold has reached 25 million tonnes, Qin told reporters on Friday.
"Some of the wheat and rice is used in feed, which would not have any impact on our food grain security," Qin said.
"China's rice, and wheat inventories are both at historically high levels and can meet more than one year's consumption demand."
The base price for the private rice auction on Wednesday, was 1,500 yuan ($228.62) a tonne, the three sources said, much lower than prevailing corn prices between 2,700 and 3,200 yuan a tonne. <JCI-CORN-JINZH><JCI-CORN-CHNDU>
"Demand is not great. We have bought a lot (of feed grains) in advance," said a manager with a feed producer based in southern China. "Also, with the delivery, processing and transporting fees, the actual cost is not that low."
After hitting record highs in January China's corn futures prices fell 10%, dampened by imports of feed grains and feed producers switching to wheat and rice.
Feed producers and farmers built up high inventories when corn prices were rising quickly and demand from the farming sector has been subdued by recent African swine fever outbreaks, said a purchasing manager with a feed producer based in northern China. ($1 = 6.5610 Chinese yuan renminbi) (Reporting by Hallie Gu and Shivani Singh Additional reporting by Stella Qiu Editing by David Goodman & Simon Cameron-Moore)
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