Persistent dry weather has hit most of China's major corn and soyabean growing areas in the north-east since April, and farmers grew more corn than soyabeans this year because of better returns, officials said on Wednesday.
The north-east areas-Heilongjiang, Leaning and Jilin - as well as the Inner Mongolia region, produce about 40 percent of the country's corn and more than half of its soyabean output. "Drought was serious in the western and eastern part," said Qiu Shun of Julienne's agriculture department.
"Drought is developing in the central part." "But we are expecting rains in the coming days," she added. Jilin is the country's largest corn growing area.
Jilin had 49 percent less rain in May than the same period in normal years, while the neighbouring province of Heilongjiang, the country's largest soyabean growing area, had 31 percent less rainfall, agriculture officials said.
Farmers completed planting last month. Acreage under corn grew by 2 percent this year from 2005 , while soyabean acreage fell 2 percent, initial figures from the China National Grain and Oils Information Centre (CNGOIC) showed.
Corn prices, fuelled by rising demand from the corn processing industry, were at there highest for many years. A report by the Dalian Commodity Exchange showed that in Heilongjiang province farmers can earn 200 yuan ($24.95) more for each um (0.07 hectares) of their corn than growing the same area of soyabean.
The calculation was based on current futures prices. The survey by CNGOIC showed that feed mills and corn processing firms continue to expect strong spot corn price in the coming weeks.
"There is still room for prices to rise further because of tight supplies in Shandong and Henna and rail transportation problems from the north-east," the centre's market monitoring division said in a report.
"Many traders are taking corn to build up stocks and wait for higher prices," said a dealer at an international trading house. "It looks like supply is not abundant." China's State Statistical Bureau revised 2005 corn production to a record high at 139.37 million tonnes and soyabean at 15 million tonnes for 2005.
Beijing's direct subsidies also encourage farmers to shift to grow more grain this year.
China has doubled its direct subsidies to farmers this year and earmarked an additional 14.2 billion yuan to alleviate the pressure of price rises of diesel oil, fertiliser and pesticides, the People's Daily reported.