China will sell 200,000 tonnes of vegetable oils from state reserves in an auction on Friday to boost supplies and cap rising food prices ahead of the week-long National Day holiday.
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The government has said it would release corn, vegetable oils and pork from state reserves to curb inflation, which rose to a decade high in August, largely driven by food prices.

Vegetable oil prices, which rose 34.6 percent in August from a year earlier, were the second-largest gainer in the August inflation data.

The State Grain Administration said 178,000 tonnes of soyoil and 22,000 tonnes of rapeseed oil would be auctioned to oil firms.

Each firm can only bid for a maximum of 5,000 tonnes to ensure that the cooking oils can reach the market as quickly as possible, it said on its Web site.

The sales have pushed down domestic soyoil prices. Dalian soyoil futures contracts fell across the board on Wednesday morning. The most-traded May 2008 contract fell 0.4 percent to 8,296 yuan ($1,104).

Physical soyoil prices fell as much as 1.7 percent to about 8,500 yuan a tonne.

But analysts said Beijing held only a small quantity of vegetable oil reserves and was unlikely to push prices much lower. Soyoil prices have been strong over the past several weeks, supported in part by higher import costs for soybeans. ($1=7.511 Yuan)