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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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Tue, 05/31/2011 - 08:14 | Link to Comment Rusty Shorts
Tue, 05/31/2011 - 08:22 | Link to Comment Cash_is_Trash
Cash_is_Trash's picture

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

Tue, 05/31/2011 - 09:24 | Link to Comment JW n FL
JW n FL's picture

http://www.youtube.com/watch?v=O5Xe_ATNWQQ

 

Al Bartlett on energy consumption versus population

 

http://www.youtube.com/watch?v=ClqUcScwnn8

 

David Rockefeller speaks about population control.

Tue, 05/31/2011 - 10:01 | Link to Comment Antarctico
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.

Tue, 05/31/2011 - 13:05 | Link to Comment JW n FL
JW n FL's picture

 

rockefeller

 

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!

 

http://library.brown.edu/about/datacenter/

 

Social Sciences Data Center Links:
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Tue, 05/31/2011 - 08:22 | Link to Comment Oh regional Indian
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.

ORI

http://aadivaahan.wordpress.com/2011/05/26/the-video-trailer/

Tue, 05/31/2011 - 09:18 | Link to Comment Hephasteus
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.

Tue, 05/31/2011 - 11:21 | Link to Comment Oh regional Indian
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.

ORI

Tue, 05/31/2011 - 10:55 | Link to Comment Urban Redneck
Urban Redneck's picture

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

Tue, 05/31/2011 - 08:18 | Link to Comment Hephasteus
Hephasteus's picture

Guess what I just learned.

Go Daddy.com is cia fuck cunts.

Don't they advertise a bunch on cnbc.

Tue, 05/31/2011 - 08:24 | Link to Comment Vlad Tepid
Vlad Tepid's picture

Apropos of what again?

Tue, 05/31/2011 - 09:25 | Link to Comment Hephasteus
Hephasteus's picture

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

http://dprogram.net/2011/01/22/web-host-go-daddy-shuts-down-pakistani-we...

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.

Tue, 05/31/2011 - 09:35 | Link to Comment Rynak
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.

Tue, 05/31/2011 - 08:23 | Link to Comment eigenvalue
eigenvalue's picture

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

Tue, 05/31/2011 - 08:23 | Link to Comment Vlad Tepid
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.

Tue, 05/31/2011 - 09:01 | Link to Comment GetZeeGold
GetZeeGold's picture

 

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

 

 

Tue, 05/31/2011 - 08:27 | Link to Comment Drag Racer
Drag Racer's picture

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

http://thaifinancialpost.com/2011/05/10/rice-exporters-warned-of-market-...

this is not the answer!!!

Tue, 05/31/2011 - 08:44 | Link to Comment Bubbles the cat (not verified)
Tue, 05/31/2011 - 10:37 | Link to Comment goldfish1
goldfish1's picture
a new study http://indiatoday.intoday.in/site/story/toxin-from-gm-crops-found-in-human-blood/1/137728.html reveals an insecticide produced in GM corn actually gets absorbed into the human body.
Tue, 05/31/2011 - 14:06 | Link to Comment hardcleareye
hardcleareye's picture

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

Tue, 05/31/2011 - 13:00 | Link to Comment Bubbles the cat (not verified)
Tue, 05/31/2011 - 08:28 | Link to Comment williambanzai7
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.

Tue, 05/31/2011 - 09:21 | Link to Comment Ben Fleeced
Ben Fleeced's picture

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

Tue, 05/31/2011 - 13:44 | Link to Comment hardcleareye
hardcleareye's picture

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

Tue, 05/31/2011 - 12:47 | Link to Comment Saxxon
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!

Tue, 05/31/2011 - 14:02 | Link to Comment hardcleareye
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?

 

Tue, 05/31/2011 - 08:37 | Link to Comment Bubbles the cat (not verified)
Tue, 05/31/2011 - 10:44 | Link to Comment goldfish1
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.

Tue, 05/31/2011 - 13:34 | Link to Comment hardcleareye
hardcleareye's picture

Fresh water supply...like 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>

 

 

Tue, 05/31/2011 - 08:39 | Link to Comment theMAXILOPEZpsycho
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.

Tue, 05/31/2011 - 08:47 | Link to Comment LRC Fan
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 bread...free 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. 

Tue, 05/31/2011 - 09:24 | Link to Comment Ben Fleeced
Ben Fleeced's picture

"...it 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.

Tue, 05/31/2011 - 08:50 | Link to Comment Bubbles the cat (not verified)
Tue, 05/31/2011 - 08:46 | Link to Comment LRC Fan
LRC Fan's picture

Transitory. 

Tue, 05/31/2011 - 09:16 | Link to Comment GetZeeGold
GetZeeGold's picture

 

Transitory.

 

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

 

Tue, 05/31/2011 - 09:26 | Link to Comment Ben Fleeced
Ben Fleeced's picture

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

Tue, 05/31/2011 - 08:47 | Link to Comment Rynak
Rynak's picture

White swans are now an endangered species.

Tue, 05/31/2011 - 08:49 | Link to Comment lizzy36
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.

Tue, 05/31/2011 - 08:50 | Link to Comment topcallingtroll
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.

CRUSH THOSE PEGGERS BEN!

Tue, 05/31/2011 - 11:40 | Link to Comment hardcleareye
hardcleareye's picture

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

Tue, 05/31/2011 - 09:02 | Link to Comment White.Star.Line
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.

Tue, 05/31/2011 - 10:46 | Link to Comment goldfish1
goldfish1's picture

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

Float a few headlines and voila.

Tue, 05/31/2011 - 11:02 | Link to Comment White.Star.Line
White.Star.Line's picture

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

Tue, 05/31/2011 - 09:11 | Link to Comment Whatta
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.

Tue, 05/31/2011 - 09:22 | Link to Comment qmhedging
qmhedging's picture

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

Tue, 05/31/2011 - 09:32 | Link to Comment Texas Gunslinger
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. 

 

Tue, 05/31/2011 - 09:41 | Link to Comment tmosley
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.

Tue, 05/31/2011 - 10:17 | Link to Comment Vlad Tepid
Vlad Tepid's picture

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

Tue, 05/31/2011 - 10:47 | Link to Comment russwinter
russwinter's picture

Predicting Riots, Civil Order and Revolution:

http://www.wallstreetexaminer.com/blogs/winter/?p=3813

Tue, 05/31/2011 - 09:55 | Link to Comment brian0918
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.

Tue, 05/31/2011 - 11:04 | Link to Comment hardcleareye
hardcleareye's picture

"Is the drought really to blame?"

Yes the drought is to blame... and it is a big deal... it is the worst in over 100 years, and is the third year in a row of drought, the Yangtze river is at a 142-year low. 

With regards to reserves, China's food production has greatly varied over the last 10 years for a number of reasons, those "set aside" reserves were already "tapped out" and there has not been enough excess production in China to replenish the used reserves.

 

Tue, 05/31/2011 - 10:22 | Link to Comment Bansters-in-my-...
Bansters-in-my- feces's picture

"The PBoC may be guilty of many things, but manipulating the weather is not one of them"

I hate to be the bearer of bad news...BUT....
China does do weather modification(manipulation)...just like the USA and Canada and probably many other fucktards.
Just saying.

Tue, 05/31/2011 - 10:33 | Link to Comment Bansters-in-my-...
Bansters-in-my- feces's picture

TexasGunslinger..... FUK OFF you fucking sack of shit. Have you sucked off your daily quota of goverment officials today...? You cum swallowing piece of shit.

Fuck Off and die....you are NOT welcome here

Tue, 05/31/2011 - 10:44 | Link to Comment Caveman93
Caveman93's picture

So even with all the cash reserves China has, Mother Nature (HAARP) still holds the cards???

Tue, 05/31/2011 - 13:38 | Link to Comment Cathartes Aura
Cathartes Aura's picture

HAARP isn't "Mother Nature" - it's Daddy Military, looking to "own" and control everything, as all ways.

Mother Nature bats last though.

Tue, 05/31/2011 - 11:30 | Link to Comment Use of Weapons
Use of Weapons's picture

Useful 'quick over-view of global droughts going on at the moment'

http://drought.mssl.ucl.ac.uk/drought.html?map=%2Fwww%2Fdrought%2Fweb_pa...

Regions listed have had droughts for over two years now:

http://news.bbc.co.uk/1/hi/8587516.stm - 2010

http://www.nytimes.com/2011/02/09/business/global/09food.html - 2011

Water releases from the Three Gorges reservoir, which is upstream from the drought areas, will be increased by 10-20 per cent today, according to the State Flood Control and Drought Relief Office. May 24 2011

http://www.ft.com/cms/s/0/7d6e4db8-861e-11e0-9e2c-00144feabdc0.html

Economic indicators [or, China knows that centralised debt is good for business. Their business, not the debtor, of course]:

China's central bank is offering emergency loans for drought-relief projects...Last month, the authorities pledged $15bn (£9.4bn; 98.6bn yuan) in support to help farmers cope with the effect of the drought.

http://www.bbc.co.uk/news/world-asia-pacific-12497459

As parts of China suffer their worst drought in 50 years, the government is turning to "weather modification" to avert disaster.

http://news.sky.com/skynews/Home/World-News/Video-Government-Uses-Rocket...


http://www.zerohedge.com/article/chinese-speculators-now-blamed-plunging...

I'm surprised; China is a place where I suspected 'old' methods of storage (root cellars, pickling - they pickle bird's eggs, aka the methods before 24/7 supermarkets & refrigeration) to be both well known, current & practised. Neither is drought a new phenomena in China - desertification & lack of water (esp. in the North) have been hot topics for a decade now, and the Chinese are considered to be at the forefront of desert reclamation. (http://www.unccd.int/actionprogrammes/asia/national/2000/china-eng.pdf - phase #3 of desert reclamation should have started in 2011. Not an area I know anything about, so no idea if it was pie-in-the-sky or actually viable planning.)

Intuition makes me think of a recent India summit & golden rice 2.

A 2010 article forecast that golden rice would clear final regulatory hurdles and reach the market in 2012.[11] The International Rice Research Institute (IRRI) is currently coordinating the Golden Rice Network with other partners who have expertise in agriculture and nutrition to research and develop Golden Rice. [12] In 2011, IRRI announced that Helen Keller International (HKI) a leading global health organization that reduces blindness and prevents malnutrition worldwide, was joining their Golden Rice project to further develop and evaluate Golden Rice. [13]

http://www.goldenrice.org/Content1-Who/who1_humbo.html

Drought and salt tolerance: Several research projects are concerned with developing new rice strains that can survive with less water and can grow on saline soils. In China, saline-tolerant varieties have already been developed in which a gene from Suaeda salsa, a plant that grows well on saline soils, has been inserted. Similar rice strains are also undergoing field trials in Europe, the USA and India.

http://www.gmo-compass.org/eng/database/plants/064.rice.html

For the record, Europe is experiencing record hay, straw, barley (etc) prices at the moment due to rainfall -

http://www.fwi.co.uk/Articles/2011/05/28/127063/Barley-prices-pushed-to-...

He said the current price for a bail of hay started at £6, but could go up to £10, whereas a year ago he would have charged between £2 and £5.

http://www.bbc.co.uk/news/uk-england-essex-12493328

 

Anyhow - remember, WWIII will not be fought over oil, it will be fought over water.

http://www.fas.org/irp/cia/product/globaltrends2015/index.html

http://www.yalibnan.com/2011/05/19/ahmadinejad-blames-the-west-for-droug...

 

Big enough drought... that'll be a nice coal coloured swan then. Looks like GS are (again) ahead of the curve with their 15th annual biotech forum btw - and how is everyone's CCOs doing?

Tue, 05/31/2011 - 11:54 | Link to Comment mickeyman
mickeyman's picture

They should have bought futures on water, so they could call for delivery.

Same for farmland.

Tue, 05/31/2011 - 11:57 | Link to Comment Nick Maxed
Nick Maxed's picture

food prices not up significantly in Beijing.

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