February 10, 2009

China's drought may persist into March, with dominant weather pattern across the nation's north not expected to change in the near term, the China National Grain and Oils Information Centre (CNGOI) said.

CNGOI said that about 10.2 million hectares of all crops are affected, an estimate that is in line with a February 6 figure from the Office of Flood Control and Drought Relief Headquarters.

Persistent dry weather in the nation's main wheat-growing regions may buoy Chinese and international prices, and hamper China's bid to boost rural incomes even as it fights the impact of the global recession.

China's drought helped to boost wheat futures on the Chicago Board of Trade (CBOT) as much as 4.7 percent on Thursday (Feb 5).

Wheat for September delivery on the Zhengzhou Commodity Exchange gained for a ninth day on Monday (Feb 9), adding 0.5 percent to US$323 a tonne which is the highest price for a most-active contract since March.

China's Ministry of Agriculture said Monday that government- led efforts to combat the drought were paying off, with 105 million hectares of wheat affected, down 313,333 hectares from a day ago.

Some rain is forecast for northern China's Yellow River and Huai River regions this month, which may slow some crop damage, according to CNGOI's report.

Winter wheat crops account for 95 percent of the affected area and about 5.4 million hectares in the eight hardest-hit provinces are being irrigated by locals as they fight the drought, the report said.

Beijing Orient Agribusiness Consultant analyst, Ma Wenfeng said the nation has wheat stockpiles of 60 million tonnes which accounts for more than half of annual output.