China is the largest consumer of grain in the world. They are able to meet their demand by producing over 500 million tons of grain annually. The majority of their grain is produced in the northern regions of the country. The current drought is mainly affecting the southwest portion of the country, where 5.3 million hectares are under stress due to the drought. The government estimates that this will result in the loss of production of 30 million tons of grain in 2010. This should have little effect on the worldwide grain market. China stockpiles roughly 40% of their annual demand to draw on in situations like this. There is also a huge oversupply of grain on the world market at the moment, which has depressed prices and made it far cheaper for China to replace the lost supply if necessary.
China Has ‘Test’ Meeting Grains Goal, Premier Says
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