SINGAPORE/BEIJING (Reuters) - A prolonged drought in China could hit grains output in key growing regions, further squeezing global supplies and putting upward pressure on prices, but plentiful domestic wheat stocks will act as a cushion and keep import volumes low.
closely watching the weather in
are going to be looking to North America and
Chicago Board of Trade corn has climbed 80 percent since the start of May last year, while wheat has risen around 50 percent. Last week alone corn and wheat jumped more than 10 percent on expectations of a global squeeze in supplies.
CROP CONCERNS & TIGHT GLOBAL SUPPLIES
seeding is crucial for optimal yields needed to replenish
percent of the
Rains in the
northern U.S. Plains have put spring wheat plantings behind schedule, with
seeding only 34 percent complete in the top wheat state of
CORN FORECAST, INFLATION
A Chinese government think tank has forecast 2011 corn output will rise to a record 181.50 million tonnes due to increasing acreage, but analysts said it would be a tough target to achieve.
"The 180 million tonnes level is a bottleneck, and the general market forecast, which is yet to come, should be lower than the forecast," said an analyst with consultancy China Corn.
Food prices fell 0.4 percent in April from March but were 11.5 percent higher than a year earlier.
"Global corn supplies are extremely tight and the world is banking on sharp increases in production," said Mathews. "Chinese authorities were suggesting a lift in local production and they will need every bit of that."
Capital warned that recent extreme weather incidents have created upside risks
to food inflation for the second half of 2011, citing
conditions in the
However, Hai Yang, a wheat analyst with Esunny
Information & Technology Co., said
Water levels on the Yangtze midstream are 6 meters lower than they were the same time last year, with rainfall only a fifth of the levels seen in 2010, according to the China Daily newspaper, quoting local drought relief agencies.
The market is
not overly concerned about wheat supplies in
"The weather this year is likely to be abnormal, with northern China likely experiencing floods while southern China likely sees drought," said Gao Yanrong, an analyst with Dalu Futures.
have wells, and we can irrigate (the corn) even if there is a drought,"
said a farm ministry official in
is also seeking other origins and developing new sources for supply.
Analysts say the weather in July-August, which is the crucial growing period, will be the deciding factor to final output.