China's top wheat growing province of Henan is offering 1.5 million tonnes of stocks to domestic flour mills amid tight domestic supplies, local grain officials said on Tuesday.
It was the second sale this month by the province in an effort to help cool down grain prices, which have reached their highest levels in eight years.
On March 17, the province sold about 900,000 tonnes of wheat at prices of between 1,480 yuan ($178.8) and 1,710 yuan per tonne.
Bottom prices for wheat harvested in 1998 were set at 1,560 and 1,580 yuan per tonne to designated flour mills in the face-to-face negotiations beginning on Tuesday, traders said.
The China Grain Reserves Group's Anhui branch was also planning to sell about 70,000 tonnes of wheat and 106,000 tonnes of rice from central government reserves in a public tender on Wednesday, local grain officials said.
Wheat prices in major growing areas have fallen slightly since on Sunday following the sales of million tonnes of rice stocks in the north-east province of Heilongjiang, traders said.
Middle-grade white wheat was quoted at 1,640 yuan per tonne in Henan, down 80 yuan per tonne from last week, they said. "It will only be a short-term break, prices will continue to rise," said a trading manager at a large flourmill in Henan.
Henan granaries repurchased two thirds of the amount of wheat at the last auction on expectations of higher prices as domestic wheat harvest in 2004 was expected to be the lowest in about 20 years, he said.