June 29, 2011

 

 

Grain prices in China is expected to rise slightly in the second half of this year on the back of increasing input, planting, and labour costs.

 

According to the Ministry of Agriculture (MOA), China will see an output increase of winter wheat for the eighth consecutive year. The country has completed harvesting 317 million mu (more than 21 million ha), or more than 90% of its winter wheat crops.

 

As the major summer grain produce is wheat, the country is highly likely to reap a better grain harvest in the summer, which accounts for about 25% of annual grain production.

 

The recent rain-triggered flood following the drought in the past several months also aroused worries about early rice production this year. Though the earlier drought had a minor impact on summer grain, which has winter wheat as the major crop, the floods may exacerbate the negative effects on agricultural production in the middle and lower reaches of Yangtze river as it is now the period for the harvesting of early rice, replanting mid-season rice, and summer seeding.

 

If flood persists for a long time, farmers' seeding enthusiasm will be dampened and this may affect autumn grain production, analysts say.

 

However, the MOA said that the recent flooding in south China was regional and short-term. Damage to the autumn grain programme could be properly handled.

 

The National Development and Reform Commission (NDRC) also said in a statement that floods would have a limited impact on agricultural production and were very unlikely to trigger a sharp price of grain.

 

Weather conditions were still favourable in major grain producing areas outside the middle and lower reaches of Yangtze river, the commission said, adding that the government had been able to keep prices stable thanks to an increase in wheat production, an expanded acreage of autumn grain, and sufficient state reserves.

 

Wheat and early rice prices on the Chinese market hit record highs at the beginning of this year boosted by drought in the middle and lower reaches of Yangtze River. As the drought was relieved by irrigation and rainfalls, prices started to fall back in February and showed a downward trend in the following months.

 

Meanwhile, grain enterprises from nine major grain producing provinces in China purchased a total of 6.2 million tonnes of wheat from 2011's crop as of June 20, sources reported.

 

State-owned grain enterprises bought 4.12 million tonnes of wheat, accounting for 66% of the total amount.