Heavy rains in central and south China are affecting this year's rice crop. An article from a rice investors report sponsored by Sinograin (China's grain reserve company) reported that heavy rains had caused flooding, inundating rice fields and causing pest infestations in major production regions of Hubei Province. According to one assessment, this year's rice production could be down 10%. In some areas, production may be down 20%.
Infestations of insects (planthoppers and leaf rollers) have also hit the rice crop in Hubei. Even worse, pests are affecting grain stored in warehouses. Teams from the Hubei plant protection station were sent out to inspect the rice crop in 11 counties. Most rice fields were inundated with water, conditions that encourage sheath blight, rice blast and bacterial leaf blight.
The early-season rice harvest, about 7-15 days away, was also affected in Jiangxi and Anhui Provinces. This could also affect planting of the late-season crop, planted after the early rice harvest.
However, one rice analyst quoted in the article says that it's too soon to tell how this year's production will be affected. He says there was already an expansion of rice planted area this year, and some of the lost early-season crop might be replanted for fall harvest, offsetting some of the flooding losses. A Hubei official says they are starting a campaign to replant.
Rice prices are rising. The 2009 early rice support price was .9 yuan/jin ($265/metric ton) and this year it was set at .93 yuan/jin ($274). According a rice analyst quoted in the article, last year, the market price for early rice was in the .8-.9 yuan/jin range, and this year it will probably sell at .95-.96 yuan/jin ($279-$282/mt), about 100 yuan/mt ($14) more than last year.
Officials hope to head off a big increase by selling their reserves into the market. According to the article, at the end of June the government still held:
Early-season indica rice:
500,000 mt bought in 2008
2.77 mmt bought in 2009
Single- or late-season indica rice:
5.1 mmt bought in 2008
5.1 mmt bought in 2009
That makes a total of approximately 13.5 million metric tons. [This may just be the amount they purchased at the support price; Sinograin probably has more rice reserves than 13.5 mmt.]
They will sell this rice to cool off prices if needed.