BEIJING: 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, said three sources close to the matter. The country’s corn prices hit record highs early this year on supply concerns raised by dwindling stocks and reduced output.

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.

The base price was at 1,500 yuan ($228.62) a tonne, the three sources said, much lower than current corn prices that range between 2,700 and 3,200 yuan a tonne.

“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.”

China’s corn futures prices fell 10% after they hit record high levels in January this year, pressured by imports of feed grains while feed producers stepped up purchases of wheat and rice as alternatives.

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.

China had planned to sell wheat and rice from state reserves to animal feed producers as early as July last year to tame surging corn prices.