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Drought in China threatens global wheat supply

Rob Schmitz Feb 9, 2011
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Drought in China threatens global wheat supply

Rob Schmitz Feb 9, 2011
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ADRIENE HILL: The exchange merger isn’t the only news shaking commodities markets today. The United Nations issued a global alert over a potentially devastating shortage of wheat coming from China. The country’s suffering a significant drought in its northern-breadbasket region.

As Marketplace, China Bureau Chief, Rob Schmitz reports, the coming shortage will stretch around the world.


ROB SCHMITZ: The Chinese have already been noticing something’s off when they visit their favorite noodle shops. At this hole in the wall in Shanghai, management didn’t even have time to print new menus. Instead, waiters crossed out the old prices with a pen, adding the equivalent of 12 cents to anything made with wheat. Those menus might look even messier in a couple months, says Ma Wenfeng, a Beijing analyst who follows China’s grain markets.

MA WENFENG: If these weather conditions continue through April, the price of wheat in China will increase by twenty to fifty percent more. This is a serious problem.

A problem that’ll soon reach into American pocketbooks. This is the latest problem that’s contributing to record levels of inflation in China. Ma says investors around the world are already responding to the wheat shortage, and driving the price of wheat futures in the U.S. to record levels. That means that everything from bread to a box of — yes — Wheaties will cost more to make, and likely more to buy.

In Shanghai, I’m Rob Schmitz, for Marketplace.

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