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Posts Tagged ‘Shandong

Winter drought threatens China wheat production

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Urbanisation in agricultural plains, visible from the flight path close to Beijing. Photo: Rahul Goswami

Urbanisation in agricultural plains, visible from the flight path close to Beijing. Photo: Rahul Goswami

The FAO has just released a special briefing on wheat production in China, through its Global Information and Early Warning System on Food and Agriculture (GIEWS). “A severe winter drought in the North China Plain may put wheat production at risk,” said the FAO. “Substantially below-normal rainfall since October 2010 in the North China Plain, the country’s main winter wheat producing area, puts at risk the winter wheat crop to be harvested later in the month of June.”

Low precipitation resulting in diminished snow cover has reduced the protection of dormant wheat plants against frost kill temperatures (usually below -18°C) during winter months from December to February. Low precipitation and thin snow cover have also jeopardized the soil moisture availability for the post-dormant growing period. Thus, the ongoing drought is potentially a serious problem.

FAO China drought map showing cumulative rainfall and deficit in the wheat growing region.

FAO China drought map showing cumulative rainfall and deficit in the wheat growing region.

FAO’s GIEWS said that the main affected provinces include Shandong, Jiangsu, Henan, Hebei and Shanxi, which together represent about 60% of the area planted and two-thirds of the national wheat production. According to official estimates some 5.16 million hectares out of the total of about 14 million hectares under winter wheat may have been affected in these provinces. The drought has reportedly affected some 2.57 million people and 2.79 million livestock due to the shortages of drinking water.

So far there have been some positive developments, such as the relatively mild temperatures, particularly the absence of frost kill temperatures, and the lower than average sub-zero temperature days. This combined with increased supplementary irrigation made available by the Government is likely to compensate to some extent the negative impact of low snow fall and low moisture availability. However, adverse weather, particularly extreme cold temperatures could still devastate yields. The Government has allocated some USD 15 billion to support farmers’ incomes and subsidize the costs of diesel, fertiliser and pesticide.

This drought in north China seems to be putting further pressure on wheat prices, said FAO, which have been rising rapidly in the last few months. In January 2011 the national average retail price of wheat flour rose by more than 8% compared to two months earlier and stood at 16% higher than a year earlier. Although the current winter drought has, so far, not affected winter wheat productivity, the situation could become critical if a spring drought follows the winter one and/or the temperatures in February fall below normal.

Drought conditions take a grip on China’s provinces

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Xinhua has reported that about 2.2 million people in China are short of drinking water as severe droughts continue to plague winter wheat producing areas. Relaying information provided by China’s drought relief authorities, the Xinhua report said that rainfall in Henan, Shanxi, Hebei, Shandong, Jiangsu, Anhui and Shaanxi provinces has decreased 20% to 90% over the last four months from the same-period average.

The news agency quoted Chen Lei, deputy director of the State Flood Control and Drought Relief Headquarters. Relentless droughts that started to dry out winter wheat producing areas such as Shandong and Henan provinces in November continue, affecting some 4 million hectares of cropland, said Chen. Water supply is running low in cities around the Yellow, Huaihe and Haihe rivers in northern and central parts of China, he said.

AlertNet (Thomson Reuters) has reported that drought has affected winter wheat crops in 17 percent of China’s wheat growing areas in the country’s northern bread basket, and dry weather is forecast to extend until spring. In April 2010, AlertNet had reported on what it called China’s “drought of the century”, and had then described a calamitous picture: “More than 50 million people across a large swathe of southwest China have been hit by the worst drought in a century. It started in November and forecasters see no signs of the drought abating in the near future. Over 16 million people and 11 million livestock are short of drinking water, while more than 4 million hectares of farmland is affected and an estimated million hectares will yield no harvest this year.”

Underlining the contradictory perceptions of agencies and the world grain trade, Bloomberg has reported an assessment by the China Meteorological Administration as saying that dry weather conditions in northern China have had “no apparent impact” on most of the regions’ wheat crops because there is sufficient accumulated moisture in deeper soil layers. Even so, unusual dryness in the north and snowy conditions in southern China were caused by the La Nina weather pattern, the Meteorological report is quoted as having said, with some southern provinces experiencing the coldest January since 1961.

Written by makanaka

January 20, 2011 at 10:49

East Asia food – noodle wheat shortage and ginger-garlic speculation

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Supermarket 'udon', similar to Ramen. Photo Wikipedia

Noodle wheat? Japan and South Korea need a lot of it every year, about 800,000 tons according to industry estimates from West Australia. Noodle grade wheat requires careful blending to produce the appropriate flour. Japanese and South Korean-type noodles, such as the ‘udon‘ variety, require specialist wheat grades unlike the noodles commonly seen elsewhere, which are made from a more standard flour.

But, as Agrimoney reports, the drought in Western Australia threatens to land Japan and South Korea with a noodle shortage unless supplies of specialist wheat are carefully administered. Agrimoney has quoted top exporter CBH Group, which handles virtually all Western Australia’s grain harvest. West Australian wheat producers are worrying about how to supply noodle-grade wheat while dealing with a near-halving, to below 4m tonnes, in the state’s wheat production.

Noodle wheat typically accounts for 13-14% the state’s wheat crop. Now the shortage means noodle wheat is commanding a premium, currently at Aus$35 a tonne, which is likely to attract “opportunistic” merchants with little experience of handling the blend. Wheat growers in West Australia are being warned to avoid selling to a merchant whose bad handling of the blend might unsettle West Australia’s valuable grain trade relations with two important Asian clients.

Meanwhile, the Economic Observer of China (English) examines produce speculation in China’s agricultural market. Products being targeted according to the newspaper are garlic, ginger, honeysuckle and green beans.

Like many Japanese noodles, udon noodles are served chilled in the summer and hot in the winter. Photo Wikipedia

Shandong’s Jinxiang produces over 6 million ‘mu’ (a ‘mu’ is about 800 sq metres) of garlic. “Garlic is a reliable crop and garners steady expectations and consequently produces strong market liquidity,” said the Economic Observer. “Strong market liquidity and the availability of rural brokers, all contribute to the rapid influx of hot money. The rising price of garlic has attracted local and outside speculators.” Ginger prices have fluctuated significantly in the past few years. The newspaper reports that ginger prices were at a low of 0.4 yuan/kilo in 2008, and then skyrocketed to 4.6 yuan/kilo this year. “Speculating on ginger can generate huge profits. Like the garlic market, most of the money goes to brokers and middlemen.”

One third of prescription medications in China list honeysuckle as an ingredient; 70% of cold and flu medications use honeysuckle. “The price of honeysuckle has risen 400% this yearm” reports the Economic Observer. “Annual national demand is at 20 million kilograms but actual output hovers at 8 million kilograms. Supply of honeysuckle is dependent on distributors, who are hoarding.” Prices of green beans have surged in the past year, from 6.8 yuan/kilo to 24 yuan/kilo. “The green bean trading volume in Taonan has reached over 40 million tons, one fourth of the entire domestic market. However, most farmers have not profited from the market surge because of poor timing, pressure to pay back loans, and planting costs.”