Wheat prices reach record high despite snowfall

Wheat prices soared to two-year highs as recent snowfall in China’s northern plains failed to alleviate drought conditions, Bloomberg reported. Chen Lei, deputy director of the State Flood Control and Drought Relief Headquarters, said in a statement that the drought is likely to continue to dampen wheat output. Wheat futures hit their highest level since the summer of 2008, despite pledges by Chinese officials to spend US$2 billion to combat the drought and boost grain production. Some 42% of China’s land under wheat cultivation, or about 6.75 million hectares, has been affected by the drought, which has left 2.8 million people and 2.5 million livestock without sufficient drinking water. The US Department of Agriculture estimates that China’s annual output may have dropped to 114.5 million tons for its latest harvest, down from 115.1 million tons a year earlier.