Sunday, August 29, 2010

Floods, Drought Will Prevent Gains in China's Grain Production This Year

Natural disasters may block any increase in China’s grain production this year as the worst floods in a decade ruin crops.

Flooding cut harvests of early rice in the major growing areas of southern China, Xinhua News Agency cited Vice Agriculture Minister Chen Xiaohua as saying yesterday during a government inquiry on grain safety. Crops in low-lying areas of the country’s fertile northeast were also damaged, he said.

China’s corn imports in July surged after traders bought the most overseas grain in more than 10 years to replenish shrinking domestic supplies. Early rice production this year fell 6.1 percent to 31.3 million tons, the National Bureau of Statistics said on its website yesterday. The world’s most- populous country grows almost a third of the globe’s rice and cotton, and produces about half its pork.

“This year’s weather will not reduce the output,” Chen Shuwei, a manager at Beijing Orient Agribusiness Consultant Co. said in a telephone interview. “China will not have a shortage in the next one or two years.”

Low temperatures due to floods delayed the ripening of winter wheat by five to seven days, and spring sowing in the northeast by seven to 10 days, the minister said. Lower rice output won’t stop overall summer grain production from equaling the levels of previous years, making it China’s seventh year of bumper harvests, Xinhua quoted the government’s Chen as saying.

Yalu Floods

Heavy rain in the northeastern province of Liaoning since July flooded the Yalu River on the border with North Korea, the region’s second-worst overflow since 1949. Liaoning and neighboring Jilin should brace for further heavy rainfall this weekend, the National Meteorological Center said today.

Officials at the inquiry said they are confident in the coming autumn harvest, which produces more than 70 percent of China’s annual grain output, Xinhua said. The report cited Chen as saying the seeding area has been increased, and quoted Zhang Xiaoqiang, a vice minister of economic planning, as saying enough grain is in storage to prevent shortages.

A rise in global grain prices won’t affect prices in China due to its ample reserves, Zhang said. Imported wheat, corn and rice equal less than 1 percent of China’s output, he said. Corn rose to a 14-month high yesterday on signs of increased demand for U.S. supplies, after drought reduced crops in Russia and parts of Europe, and flooding cut acreage in Canada.

Corn Harvest

Corn output in China, the world’s second-biggest producer and consumer of the grain, may rise 4.8 percent this year to 165 million metric tons on increased planting and good weather conditions, according to a report this week by, a portal owned by China Grain Reserves Corp., manager of state grain stockpiles.

Total planted area may have expanded 2.2 percent to 471 million mu (31.4 million hectares), it said. Delayed planting and heavy rains in some regions didn’t have a significant impact on crops, the report said.

China probably won’t order further corn imports this year as global prices climb and on speculation the domestic harvest will be better than expected, according to Wanda Futures Co., the second-biggest brokerage by volume on the Dalian Commodity Exchange.
By Bloomberg News

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