China sold 891,938 tonnes of wheat, or 88.5% of the total on offer, in the first auction of state reserves since the new harvest, the National Grain Trade Center said on Monday.

The grain was sold at an average price of 2,366 yuan ($371) per tonne, according to the notice, lower than the current cash prices of wheat.

Chinese feed producers snapped up wheat from the state stockpiles during auctions in the last crop year, to replace corn, as prices of the latter grain soared to record levels.

Sales fell in the later weeks during the last round of auctions, however, as the government moved to restrict the trade and ahead of the new wheat harvest.

China’s corn prices have fallen lately, pushing feed producers in some regions to switch back to the yellow grain and cut use of alternatives including wheat.

However, rains in northern China damaged the quality of some of the corn crop, which could mean more demand for wheat from the feed sector.

Corn prices in Shandong province were 2,640 yuan per tonne, slightly higher than wheat prices in the region at 2,610 yuan per tonne as of last Friday.
Source: Reuters (Reporting by Hallie Gu and Shivani Singh; editing by Richard Pullin)