February 17, 2009

China will certainly see a drop in wheat output this year due to the ongoing drought in key producing regions, but scattered rainfall and some irrigation may contain the damage, an industry analyst who recently toured the worst-affected wheat areas said Monday (February 16).

The best case scenario is a drop in output of less than 10 percent, said the analyst with an international trading house, declining to be named.

However, drought and possible cold weather may hit output further, industry participants said.

Adequate rains in April and May will be crucial; later rainfall is unlikely to make up for the output losses in earlier stages, said the analyst.

She quoted local farmers as saying irrigation can only help produce 60%-70% of normal crops that receive sufficient rainfall.

"Even if there is an output cut of 10 percent, it will be enough to meet (domestic) demand, but the psychological impact would be much bigger (than the actual impact)," and farmers will be reluctant to sell the wheat after the harvest.

China's 2008 wheat output reached 112.5 million tonnes, up 2.9 percent on year, according to latest data from China National Grain and Oils Information Centre.