Wed, February 23, 2011
Business > Industries > Severe drought hits China

Grain prices on upward trend as drought continues

2011-02-15 08:09:52 GMT2011-02-15 16:09:52(Beijing Time)  Global Times

Wheat futures for September delivery, the main futures contract on the Zhengzhou Commodity Exchange, rose 2.39 percent Monday to 3,081 yuan ($467.22) per ton, the highest in history.

That is an increase of more than 8 percent compared with 2,851 yuan ($432.33) per ton at the beginning of this month.

According to the National Bureau of Statistics, premium flour prices have risen to 4.85 yuan ($0.74) per kilo, compared with 4.51 ($0.68) per kilo two months ago.

Meanwhile rice prices have jumped to 5.19 yuan ($0.79) per kilo from 5.03 yuan ($0.76) during the same period.

Consumers are not at all pleased with the increase in the price of staples like rice.

"Bulk rice sold at the CBD Walmart rose to 5.3 yuan per kilogram, up 0.6 yuan per kilogram less than two weeks after the Spring Festival," a customer at the Walmart supercenter who only gave his surname as Wu told the Global Times Monday. He refused to reveal his name.

Yuan Chenghong, a restaurant-purchasing agent in Tangshan, Hebei Province, said that she felt the price surge start in December.

She said the retail price of a 25-kilogram sack of flour went up from 65 yuan ($9.86) last December to 75 yuan ($11.37) per bag now.

Many blame the recent drought for the price surge, and the recent snow has failed to make the situation better.

Yu Zhenwen, an official with the Ministry of Agriculture, said that only precipitation over 50 millimeters could ease the negative effect of the drought, reported the National Business Daily.

Ma Wenfeng, an analyst with Beijing Orient Agribusiness Consultant, estimated that wheat prices would surge at most 20 percent this year.

But Ma also pointed out that drought is not the main problem at present.

Grain price increases are a reflection of ever-deteriorating inflation in general.

"Winter wheat production this year should be 110 million tons, as long as no natural disasters happened. Although it might drop to 108 million tons due to the drought, this number is still at least equal to that of last year," explained Ma.

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