Drought in China's major soy area develops; prices rise

The drought in China's major soy-producing Heilongjiang province continues to threaten crop development there, with more than 45 percent of the cultivated land affected, said the Office of State Flood Control and Drought Relief Headquarters Tuesday (June 2).

As of late May, the drought-hit areas in the province reached 6.17 million hectares, 40 percent of which faced serious conditions, according to statements published on the office's Web site.

Irrigation and other drought-relief measures have been undertaken, but so far problems brought on by the drought, which started in late April, haven't been effectively solved.

The drought is likely to continue in June, with limited rainfall and high temperature in the province expected, according to forecasts from local meteorological department.

Meanwhile, Jilin province, another big soy producing area, is also under drought threat.

Nearly 20 percent of Jilin's agricultural crop area, or 800,000 hectares, is under drought, according to data from Jilin Provincial Grain Administration.

Analysts said soy prices are likely to rise further due to the drought and reduced soy areas this year.

Benchmark January 2010 soy futures contract traded on Dalian Commodity Exchange closed the morning session 0.5 percent higher at RMB3,762/tonne.