June 23, 2011


China sees limited flood damage to grains


China's top economic planner said Wednesday (Jun 22) that devastating floods in China's major rice areas are unlikely to cause grain prices to increase sharply, playing down the damage to the grain production.


However, pork prices are likely to rise further as prices of live pigs have risen much faster than pork, the National Development and Reform Commission (NDRC) said in a statement.


The floods have had a limited effect on China's grain production despite delays in planting of rice in some areas, as the negative impact can be offset by improving field management, it said.


Weather conditions are still favourable in major grain producing areas aside from the midstream and downstream regions of the Yangtze River, the major flood-hit areas, the commission said.


"China's grain supply for the market is unlikely to be affected by a loss of early rice production," said Fang Yan, deputy director general of the department of rural economy at the NDRC.


Despite mounting inflationary pressures, the NDRC is still forecasting that grain prices will trend only moderately higher on the back of increasing input and labour costs, the NDRC said in the statement.


The government will be able to keep prices basically stable due to increased wheat production and expanded acreage of autumn grain this year, and to sufficient levels of state grain reserves, it said.


Supplies of grains are secure, as state grain inventories have risen due to restocking and imports, the commission said.


Winter wheat output will rise in 2011 for an eighth consecutive year, the Ministry of Agriculture said Tuesday.


Meanwhile, average wholesale pork prices were at a record high of RMB23.61 (US$3.65) a kilogramme as of June 17, the Ministry of Commerce's pork price monitoring system showed Wednesday. The pork price is the highest since the ministry started its monitoring system in 2004. Pork prices have risen about 63% since June last year, the data showed.


Chinese hog raisers are rebuilding herds of pigs, as soaring pork prices raise enthusiasm for expansion, the Ministry of Agricultural said last week.

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