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Drought 'Will Not Put Pressure on Grain Prices'

24 March 2010

CHINA - The drought in south-western China will not impact national grain supply or prices, it has been said.

Commodities brokerage Wanda Futures explained that crops in the affected provinces account for only a small portion of overall grain production, Bloomberg report.

"It won't add much pressure to overall food prices," director of research Wang Chen told the news provider.

The government has large stockpiles of rice and wheat, so speculation about inflated prices is not logical, he added.

Worst affected by the drought is the sugar cane crop, but this market has long adjusted for the dry conditions, Mr Chen continued.

Rapeseed output is also set to drop, the China National Grain and Oils Information Center told the news provider.

It has predicted a fall of 500,000 metric tonnes - equivalent to a 3.6 per cent decrease on last year's total output.

Five provinces in the drought-hit area account for nearly a quarter of the country's total rapeseed area.

TheCropSite News Desk

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