Record Chinese Drought Leads To "Crazy" Food Prices

Tyler Durden's picture

The PBoC may be guilty of many things, but manipulating the weather is not one of them. Yet it is precisely this that is causing the latest surge in various food prices in the mainland, and which will likely force the Chinese central bank to accelerate its tightening regime even more than before. For once the weather can be blamed, only this time, due to an already redhot inflationary indicator, it will have a far broader impact on both domestic and global monetary policy. China Daily reports: "The impacts of China's worst drought in 50 years have been served up on the nation's dining tables as the price of rice and vegetables from drought-hit provinces have skyrocketed. The average price of staple foods in 50 cities has increased significantly, and the price of some leaf vegetables has jumped 16 percent in one month, according to data from the National Bureau of Statistics....I didn't buy many leaf vegetables in the last week because the price is getting crazy," said Zhang Weirong, a 67-year-old Shanghai resident." We wish the PBoC the best of luck as it now has to use its futile monetary instruments to neutralize the lack of rain. With the Dragon Boat Festival hoiday between June 4 and 6, we now expect another interest rate hike to be announced in less than a week, in keeping with the central bank's practice of intervening monetarily during major domestic and international holidays.

A dried-up riverbed at a national nature reserve in Shishou city in Central China’s Hubei
province, May 30, 2011. [Photo/Xinhua]

More from China Daily:

Decreased production because of the drought has been cited as the major reason for price increases, and the prices of rice and vegetables may not drop soon, according to a report by the Ministry of Agriculture.

Statistics from the Office of State Flood Control and Drought Relief Headquarters show that an area of nearly 7 million hectares of arable land has been affected by the drought, with Hubei, Hunan, Jiangxi, Anhui and Jiangsu provinces most seriously affected.

"Cabbage used to be as cheap as paper, and for 5 yuan (77 cents) you would get too many cabbages to carry home," she said.

She has had to switch to melons and pumpkins, which are getting cheaper this year.

She also changed from eating porridge for breakfast to noodles.

"My grandson said he doesn't like the dishes I cook these days, but what else can I do?" she said.

Shoppers at a supermarket in Shanghai's Huangpu district complained that the price of rice produced in Hubei increased 20 percent in one month to 2.6 yuan a kg. Lotus root produced in Hunan also climbed 20 percent during the same period to 4.2 yuan a kg.

In Wuhan, capital of drought-hit Hubei, the average price of 20 monitored vegetables climbed 7.3 percent in one month. The price of cabbage almost doubled in May to 2.22 yuan a kg, according to the Ministry of Agriculture.

The price of freshwater fish, crab and shrimp also witnessed a surge in the past week. Freshwater fish production in several provinces has reached bottom as lakes and rivers are drying up.

And the scariest thing for the PBoC's Zhou Xiaochuan:

If food prices continue to soar during the summer, the increase may exceed 20 percent, which will push up inflation in the short term, Liu Ligang, an economist for the Greater China area with the ANZ Bank, said in his column for Financial Times.

It's not all bad news: aphid lovers can rejoice:

On another note, Gao Wenqi, a researcher with the Shanghai Agricultural Technology Extension and Service Center, said the drought has provided better conditions for aphids to reproduce. Aphids can produce a new generation in days with no rain, said Gao.

Hopefully this will appease the population when they are starving and looking for scapegoats to blame for the complete supply collapse in already tight foodstocks.

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Cash_is_Trash's picture

They should start printing reservoirs and filling them with printed rain water.

JW n FL's picture


Al Bartlett on energy consumption versus population


David Rockefeller speaks about population control.

Antarctico's picture

David Rockefeller speaks about population control.

How about we start global population control by zero-sizing the entire Rockefeller clan?  I'm imagining a series of televised Thunderdome matches until there is only a single survivor. The winner's prize being a one-way ride into low Earth orbit, duct taped spread-eagle to the nose cone of a surplus shuttle solid rocket booster.  Think of the pay-per-view revenues on that very special event.  We can donate the profits to UNICEF -- it will be for the kids.

JW n FL's picture




1 problem is..

when the Rockefeller's tell the truth.. and people jump them.. that’s lends them the upper hand, because when the debate over the facts is had.. they will win.


Now, if you were to say that because the Rockefellers were guilty of leading the sheep around.. to NO! benefit of the sheep.. and to the benefit of the greedy who just are more and more greedy.. I would say kudos!


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Oh regional Indian's picture

I was about to point the same thing out. They are overt weather modifiers.

But, in the end, China really screwed themselves, badly, was building the Three Gorges Dam. No landmass can handle such a massive water imbalance and not suffer. THey tired to do Great Wall II and failed miserably. And talk about a strategic target/disaster waiting to happen.

And here in India, 30% rise in milk prices in the last 2 months, not a peek from the tube addled populace. They have a different teat now.


Hephasteus's picture

People will acuse me of playing favorites but I worry about india. There's a bunch of assholes in the country but most of the people are just frikkin wonderful people. And so population dense that they are very fragile to shocks. I still like thai food better but only because it's indian inspired. But I still miss my malaysian ex-girlfriends cabbage soup even though it made you pee smell horribly.

Oh regional Indian's picture

I worry for India too.

But there is an inevitability to grand super cycles, as you well know Heph.

It's just the old wheel turning away. We are always in a race against...? yup.


Urban Redneck's picture

Cloud seeding bitchez - uses more silver than US missles and is actually beneficial to those on the receiving end.

Hephasteus's picture

Guess what I just learned.

Go is cia fuck cunts.

Don't they advertise a bunch on cnbc.

Hephasteus's picture

I don't know but they are trying to spoof my connection and it's getting irritating. Pakistan caught them.

I just wish they would get over themselves. I don't like the new world order and george bush said either your against us or your with us. I'm against them. Load up the van and let's shoot it out already.

Rynak's picture

Godaddy has so much shit on them (most of it privacy and customer-protection related), that i wonder why non-sheep even use them anymore.

eigenvalue's picture

This is bullish for agricultural products and precious metals. Shall we celebrate it?

Vlad Tepid's picture

To celebrate the starvation of Chinese people or the estwhile consumers of the food they will outbid for, you would have to be a fascist, Hitlerite anime Pikachuuuuuuu...oh, I see.

GetZeeGold's picture


I wouldn't celebrate it....but you damn sure better know how to trade it.



Drag Racer's picture

"Chinese government at present is supporting cultivation of GM rice"

this is not the answer!!!

Bubbles the cat's picture
Bubbles the cat (not verified) Drag Racer May 31, 2011 8:44 AM

Errr.....but it's the answer for profit hungry, greedy fat bastards in multinational, vertically integrated agrichemicalmutantbusinesses who don't give a stuff about you, me or anyone else. They can piss in their own faces. My genes belong to me. Not some fatass fk from Shitsville.

hardcleareye's picture

Junk science....... doesn't agree with my opinion or the profitability of the company I am invested in....  lolololol

Bubbles the cat's picture
Bubbles the cat (not verified) Bubbles the cat May 31, 2011 1:00 PM

Buh....only 1 measly flag!?! Again!?! After the best of my cheap, insipid, unevidenced, amateur, hollow, insincere, prosaic, dull, shallow rantings I still only get 1 stinkin' little flag. If this keeps up I'm takin' my sack fulla low quality, uninteresting, trashy little contributions and.....I'm goin' home.....(sniff sniff)....

williambanzai7's picture

There is something else going on here. I live in Hong Kong where food prices have increased slightly, but nothing like this.

In Shanghai, where I lived for several years, the price situation is exacerbated by the high concentration of higher paid workers and foreigners as well as real estate and energy costs.

Ben Fleeced's picture

William, Thanks agian for the post yesterday. The human side of war should be kept front and center.

hardcleareye's picture

+++ Banzi, that was an excellent post, I found it enlightening and disturbing...  good work!

Saxxon's picture

Why is Banzai junked for this correct information?

My mother-in-law, who lives on the mainland, reported that people in Shenzhen are crossing over to buy soy sauce in HK!

hardcleareye's picture

It appears that Hong Kong has always depended heavily on food imports, perhaps they have the ability to source other suppliers not available to Shanghai?


Bubbles the cat's picture
Bubbles the cat (not verified) May 31, 2011 8:37 AM

Is this a surprise to anyone who has been watching changing patterns of agricultural production and practices, commodity prices, land utilization and labour movements over the last 20 years? Now is way too late to be worrying about where the next meal is coming from. Best we can hope is we get a return to more predictable seasonal weather patterns. Oh....yeah...wonder how fresh water supplies are holdin' up round the globe?

goldfish1's picture

Midwest crop plantings are badly delayed from the ceaseless rain. A local farmer of 700 acres planted 30 acres so far. Farther south, they can't get the machinery in the fields.

Same story all around.

OTOH, earth gets a break from monsanto pollution and poisons.

OTOH, I want to plant my stuff and eat it this year.

hardcleareye's picture

Fresh water the in the mid west Ogallala Aquifer? 

Or maybe in china

"...a World Bank-->World Bank report: “Anecdotal evidence suggests that deep wells [drilled] around Beijing now have to reach 1,000 meters [more than half a mile] to tap fresh water, adding dramatically to the cost of supply.”  This was published in Jan 2010... 

Or how about the Floridian Aquifer.... 

You must be one of “those green hippy liberals” to EVEN suggest that the weather patterns might be "Abby Normal"....  so the Northwest Passage is ice free for the first time in recorded human history.  This is NOT due to that "junk science climate change crap", that's designed to scare you and manipulate you into spending honest taxpayer's money on their "junk science" research!!! It is much better to spend taxpayer money on tax breaks to the hardworking patriotic American oil companies, they at least proved honest good paying jobs to Americans and are working hard to improve and support the American economy.

The UN Climate report was a first draft "piece of crap" and was written to try to scare the global population into succeeding global  control over to the UN.  Anyways most of the contributing "scientist" have since "retracted" their findings and admitted that they were fake....  the emails published proved that they lied.  The UN even admitted that they made mistakes in the Report, what more validation do you need to discredit the whole report....

This is the same type of "junk science" research that claimed DDT and low level radiation is bad for you, didn't you know that the banning of DDT

"..caused over 50 million preventable malaria deaths and hundreds of millions of cases of painful, debilitating, poverty-causing malaria (in the developing world)," said Brian Fischer, director of issue analysis for government public policy at the American Family Association.

And we all know that Ann Couture says that Low level radiation is actually good for you, and SHE is an expert!!! 

LA LA LA LA LA , I've got my hands over my ears, I don't want to hear anything, I'm not listening...............

<sarcasm and ranting off>



theMAXILOPEZpsycho's picture

Humans should have to fight for food like animals do; that would ensure the survival of the fittest, and eliminate the ridiculous welfare communism we live under today.

LRC Fan's picture

I agree with your sentiment but it doesn't have to come down to battling your neighbor for the last scrap of markets tend towards more wealth creation, better problem solving, and efficient production in all areas, including food.  If we had completely free markets, with no central banks, no fiat money, no taxes or state regulations, no one would go hungry.  It might take some time to rebalance production from the horrible malinvestments caused by the Fed, but eventually things would get a lot better and we would all be fed.  Once the world is fed via the invisible hand of the free market, we would advance on to ever more efficient and complex tasks such as curing cancer and other diseases, exploring space, etc etc.  But we are held back by the government.  The government makes it extremely unprofitable to explore space, create better transportation options, cure certain diseases, and feed the needy.  You need a permit for everything and everything has taxes and fees baked in. 

Ben Fleeced's picture

" doesn't have to come down to battling your neighbor for the last scrap of bread..."

Until it does.

Donner party of twelve, Donner party of twelve. Your table is ready.

Bubbles the cat's picture
Bubbles the cat (not verified) theMAXILOPEZpsycho May 31, 2011 8:50 AM

You're jokin' right? We've been fighting like animals over resources (food, water, space, breeding rights) for well over 50,000 years. Which planet have you just stepped off?

GetZeeGold's picture




One word and it gets my vote for post of the decade.


Ben Fleeced's picture

Donner party of ten, Donner party of ten? Your table is ready.

Rynak's picture

White swans are now an endangered species.

lizzy36's picture

Nothing destabilizes a population like hunger. Nothing.

A couple months of this and China will have to quit bailing out Europe (and tripling down on its own bad investment choices) and start buying that UN chick pea paste.

topcallingtroll's picture

All in all I am glad to be an american.
14 percent of income spent on food.
China is closer 50 percent.


hardcleareye's picture

14 % for now, that may change in the very near future....

White.Star.Line's picture

Good thing the US has the great "flood and tornado" spring to blame for our rising food prices, instead of the Federal Reserve's monetary policies.

goldfish1's picture

Good thing the US has the great "flood and tornado" spring

Float a few headlines and voila.

White.Star.Line's picture

Maybe some of us here should start writing the articles in advance for the propaganda machine.

Whatta's picture

Position advice for this weeks trade...go long aphids, short turnips and beets.  Neutral in chickens beaks.

Speaking of drought, we still have a doozy here in TX and much of the southwest and many farmers are liquidating livestock due to lack of pasture vegetation.

I bought the property that I am currently living on back in 2004 from an elderly rancher that purchased the place in the early 1950's. There is a large stock tank (pond) on the place that he contended had never been dry since he had it built in the 1950's....and I somewhat believe him because of the presence of fish in the tank. Well, in the time since we have been owners it has been dry once and is down to the bottom scummy water currently and will probably be dry again within a few weeks without significant rain. Lucky me...two highly significant droughts in less than a decade.

qmhedging's picture

Too late in the news,China will get sufficient rain in June.Annual CPI 4% target is non-negotiable.

Texas Gunslinger's picture

For about a year, ZeroHedge was blaming every increase in food or commodities on Bernanke.  It didn't matter what commodity, where in the world, or what the real cause was, every price increase was supposedly Bernanke's fault.

It is very refreshing to see ZeroHedge finally assign blame where blame is due. 


tmosley's picture

Yeah, because we all know that printing money NEVER lead to rising prices before, just like we all know that you are a unique little snowflake who never posted under any other names before.

Vlad Tepid's picture

You could just quote Milli Vanilli and say "Blame it on the Rain".

brian0918's picture

Is the drought really to blame? It's as if people never thought of holding emergency reserves. The reality is that reserves are low due to inflation, and a drought that normally wouldn't have been a big deal is now a big deal.