Wheat reserves abundant despite drought, says China

Foreign Ministry spokesman Ma Zhaoxu told reporters that China has plentiful reserves following seven years of bumper harvests and that recent drought conditions in the wheat belt "will not affect international food prices."

In this photo taken Saturday Feb. 5, 2011, Chinese farmers water a dried up plot of wheat near Huaibei city in central China's Anhui province. China is sending relief teams to eight drought affected provinces that grow more than two-thirds of the country's wheat. (AP Photo) CHINA OUT

China’s Foreign Ministry said on Tuesday that the drought hitting large parts of the country’s wheat growing regions will not impact global food prices because China has abundant grain reserves it can tap.

Ministry spokesman Ma Zhaoxu told reporters at a regular news conference that China has plentiful reserves following seven years of bumper harvests and that recent drought conditions in the wheat belt “will not affect international food prices.”

Mr. Ma said the government was taking active measures to minimize the impact of the drought.

China is the world’s largest wheat—growing nation, but its wheat belt has gotten virtually no precipitation since late October. The government said last week it will spend $ one-billion to alleviate the drought in the parched northeast, which as of Sunday had affected 18 million acres (seven-million hectares) of crops and left nearly three-million people short of drinking water.

However, experts said China’s wheat crops are currently dormant and that rain or snow in the next month or two could still allow for good harvests.

“Good rains last October led to abundant moisture"

“Good rains last October before seeding provided abundant moisture to get the current crop sprouted and established and in good shape to overwinter,” said Jerry Norton, a commodity analyst with the U.S. Department of Agriculture.

China doesn’t publish the size of its grain reserves, but Mr. Norton said that the U.S. Department of Agriculture estimates China has about 60 million tons of wheat reserves or about 55 percent of expected domestic consumption.

Global wheat prices have spiked in recent days, with some analysts blaming China’s drought and concerns that Beijing would be forced to import wheat to meet domestic demand.

However, Shanghai—based agriculture analyst Lief Chiang of Rabobank said that numerous other factors were behind the rising prices, including flooding in Australia, drought in Russia and an early frost in Canada.

“Maybe the drought in China was the straw on the camel’s back,” he said.