There is a drought condition in North China which is a major Wheat and Rice growing area. The drought is said to be worst in last 50 years. The first alert for the drought came in Feb 2011 when the rains were totally dry season. What makes it worse is that China is world’s largest producer of Wheat.
The drought has come at the time of sowing season with very less of sowing season remaining now.
Since China has the world’s highest population it has many mouths to feed. This combined with the affluence of Chinese the per capita wheat consumption of China has increased a lot.
The wheat rallied to new highs in Feb and fell to supp[ort levels after that to 700 levels.
The commodity is trading in a range as of now but any further supply disruption can take it to new highs.
There are news of Ukraine starting wheat exports which can calm the markets for short term as of now.
But one can keep this commodity on the watch list for some time.
I've always enjoyed reading your blog and this particular post was especially good. Thanks for sharing it.
ReplyDeleteStock Cash Tips