BEIJING (Dow Jones)–China’s wheat crop could be under serious threat if
major wheat producing regions don’t get sufficient rainfall in the next two
weeks, a senior government official said Tuesday.

“The crop will face a severe situation if there is no effective rainfall in
the next 15 days,” making the government’s drought-relief work “extremely
hard”, said E Jingping, secretary general of the State Flood Control and
Drought Relief Headquarters.

Speaking at a press conference, Jingping said the country’s meteorological
department has said it expects only limited rainfall in the rest of February.

The ongoing drought, along with more demand following the Lunar New Year
holidays, has already pushed up prices in some of China’s wheat producing
regions.

Wheat prices in Dengfeng in Henan province were around CNY1,860/ton in the
week to Monday, up CNY30/ton in the previous week.

Prices in Yuncheng in Shanxi province have risen to around CNY1,880/ton, up
CNY40-CNY50.

However, the drought is unlikely to cause a big rise in wheat prices this
year as ample stocks from earlier harvests, mostly kept in state reserves, will
help ease any supply tightness, said Hai Yang, an analyst at Zhengzhou Esunny
Information & Technology Co.

Jingping also said prices won’t be affected much by the drought as the
government is sparing no effort to compensate for the lack of rainfall.

“Summer grain output (this year) won’t be greatly (affected) as long as the
government’s drought-relief measures are effective and the weather doesn’t
deteriorate,” he said.

Much of the crop could be irrigated by April, minimizing damage, he said,
adding summer grain output accounts for less than 30% of the country’s total
annual grain output.

Most wheat affected by the drought will be irrigated within 10 days, with
daily irrigation expected to cover 600,000 hectares, he said.

The area affected by drought in China’s major wheat producing regions has
shrunk by 15% as of Monday, thanks to some rains and accelerated irrigation,
according to the office.

But about 8.70 million hectares in eight provinces are still affected, down
from Saturday’s peak of 10.23 million hectares, the office said in a statement
published on its website.

Wheat areas under severe drought conditions have fallen by 1.02 million
hectares to 2.60 million hectares, it said.

-Zheng Xiaolu contributed to this story, Dow Jones Newswires; 8610 6588-5848;
tracy.zheng@dowjones.com

(END) Dow Jones Newswires

02-10-09 0253ET

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