Wheat prices drop on abundant China reserves

Beijing sought to allay global fears that a possible reduction in its wheat output shall not push up world food prices, as the country has adequate grain reserves to meet demand.
The government has spared no efforts to help local farmers fight a severe drought that hits the northern and eastern wheat-growing land. Last week, Beijing said it had budgeted up to $1 billion to farmers to fight the dry spell.
World wheat prices fell 3.6 percent yesterday, after Beijing said it has sufficient grain reserves to satisfy market demand. China's assurance greatly eased concerns that the dry spell could aggravate the tight global wheat supply heading into the spring planting season.
China's Foreign Ministry spokesman Ma Zhaoxu told reporters at a regular news conference yesterday that China has plentiful reserves following seven years of bumper harvests and that recent drought conditions in the wheat belt "will not affect international food prices."
The crippling drought in northern China, China's major wheat-growing land, has caused considerable concern abroad. The World Agricultural Organization issued a warning on a possible wheat reduction last week.
Global wheat prices have spiked in recent days, with some analysts pointing to China's drought and concerns that China would be forced to import wheat to meet domestic demand.
Data released Tuesday showed China's consumer prices rose 4.9 percent in January, driven by a 10.3 percent jump in food costs, and a 6.8 percent rise in housing prices and rentals.

(Source: http://english.peopledaily.com.cn/90001/90776/90882/7289240.html)