You’ve likely seen China’s latest drought in the news and might wonder if it will affect grain prices.
The answer appears to be no.
Severe drought in the Yangtze River region had shrunk lake and river levels to a small fraction of normal, but the crop effect was limited to early-season rice planting.
That crop accounts for 16 percent of China’s total rice production, of about 196 million tonnes.
Good rain this week will provide temporary relief, which might allow farmers to seed rice for later in the season.
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China purchased just over 20 million tonnes of wheat, corn, barley and sorghum last year, that is well below the 60 million tonnes purchased in 2021-22.
Drought earlier this year in winter wheat areas further north raised concerns, but the final damage appears to be insignificant.
The China National Grain and Oils Information Center’s first forecast of the 2011 harvest predicted 115.5 million tonnes of wheat, up 0.3 percent over last year despite a 0.3 percent drop in area.
It forecast a 12.8 million tonne rapeseed crop, down only 2.2 percent, which is mostly due to acreage reductions.
Corn was pegged at 181.5 million tonnes, up 2.4 percent, and soybeans at 14 million tonnes, down almost eight percent, again because of acreage decline rather than yield problems.
It also forecast 197.6 million tonnes of rice, up almost one percent.
The corn, soybean and rice forecasts are preliminary because they are just being seeded, while wheat and rapeseed are mostly winter crops.
Production is being maintained, but at what cost? More wells are drilled as surface water dries up, tapping already fast-falling aquifers, especially in the North China Plain where winter wheat is grown.
Also, the drought in the normally wet Yangtze region is troubling.
China has a $62 billion, multi-decade plan to divert water from the southern Yangtze River to the Yellow and Hai rivers that flow into the dry northern half of the country. It will force relocation of hundreds of thousands of people and present untold costs for the environment.
How long can China continue to exhaust its aquifers and manipulate scarce water to maintain its official goal of 95 percent self sufficiency in grain?
Chen Xiwwen, China’s top agricultural official, has already said increased imports might be preferable to the environmental costs of boosting domestic production, such as depleted aquifers, erosion and overuse of fertilizer.
