BEIJING, Oct 11 (Reuters) - China's regular auction of soybeans from state reserves on Thursday drew a lukewarm response with only around half of the stocks sold after the government hiked the bidding price for some stocks by 15 percent, results of the auction showed.
A total of 225,355 tonnes, or 56 percent of the total 401,193 tonnes on offer, was sold, the National Grain & Oil Trade Center said on its website. (www.grainmarket.com.cn)
China, which buys about 60 percent of globally traded soybeans, has been selling reserves to help ease tight market supplies caused by the worst drought in decades in the United States. It is expected to continue doing so well into 2013.
But the latest hike in bidding price, which together with transport and other costs works out to be similar to both domestic prices and import prices, has made reserve sales unattractive.
A four-week slide of about 11 percent in benchmark Chicago prices Sc1 also added to the tepid response at the auction.
"There is no price advantage for state reserves anymore," said one industry analyst, who declined to be identified because he was not authorised to speak to the media.
Selling prices at the auction, where about half the stocks were from 2010 harvests, hovered between 4,324 yuan ($690) to 4,492 yuan per tonne. The base price for previous auctions was set at 3,900 yuan and the soybean stocks were from older 2008 and 2009 harvests.
Front-month Dalian futures price DSAc1 closed up nearly 1 percent at 4,745 yuan per tonne on Thursday.
Out of total volumes on auction, 187,000 tonnes were from 2010 harvests, the grainmarket website showed. Only six percent of the 2010 stock was sold at an average price of 4,492 yuan.
There were no bidders for the 85,646 tonnes of the 2010-harvested soy offered in Inner Mongolia.
Beijing could have raised the bidding price this time in a bid to deter buyers from reselling stocks to the state reserve later at a profit, a second analyst said.
China is expected to start stockpiling from the new harvest for state reserves and the market believes the government may be willing to pay 4,400 yuan per tonne to farmers.
"If the bidding price was set the same or 3,900 yuan per tonne, some buyers might resell the cheap soy back to the state later," said the second industry analyst.
