China’s heatwave/drought is not fully appreciated, esp re: macro and ag implications. Here’s a thread on the latter, taken from analysis by the brilliant @Even_Pay. Hope she doesn’t mind; everyone should follow her.
Bottom line: A big test for China’s food security push 1/17
Bottom line: A big test for China’s food security push 1/17
@Even_Pay A couple details on the scope of the drought from government sources:
The current drought is impacting about 800,000 hectares of total area (not just farmland) across six province-level regions – Sichuan, Chongqing, Hubei, Hunan, Jiangxi, and Anhui. 2/17
The current drought is impacting about 800,000 hectares of total area (not just farmland) across six province-level regions – Sichuan, Chongqing, Hubei, Hunan, Jiangxi, and Anhui. 2/17
@Even_Pay Data from government sources indicates most of the impacts are being felt in:
-Mountainous areas (mostly orchard crops and veg)
-Rain-fed farming areas (usually smaller farms growing non-staple crops)
-At the margins of major irrigation areas
3/17
-Mountainous areas (mostly orchard crops and veg)
-Rain-fed farming areas (usually smaller farms growing non-staple crops)
-At the margins of major irrigation areas
3/17
@Even_Pay MARA dispatched emergency technical teams to drought and heat-hit regions to help with response last week. That's good news for staples & anyone in an irrigation district. There's also a big drought relief subsidy package on the way.
4/17
4/17
@Even_Pay Some details about crops in roughly the order in which they're likely to be impactful:
Orchard crops and fresh vegetables are taking a beating, and domestic prices at the market are going to be a mess in the short term.
5/17
Orchard crops and fresh vegetables are taking a beating, and domestic prices at the market are going to be a mess in the short term.
5/17
@Even_Pay That’s particularly true in the six province-level areas under drought warning (Sichuan, Chongqing, Hubei, Hunan, Jiangxi, and Anhui) and the major urban centers that rely on those regions for supply (Chengdu, Chongqing, Wuhan, Suzhou, Hangzhou, Shanghai)
6/17
6/17
@Even_Pay We haven't seen it reported but expect folks are losing livestock to heat as well, meaning further upward pressure on pork prices, the food basket, and CPI.
7/17
7/17
@Even_Pay Rice - The drought impacted region accounts for about 30% of China's annual rice production in total. However, a few of these provinces harvest multiple rice crops per year, meaning the total rice at risk is well under that 30% figure.
8/17
8/17
@Even_Pay Most (but not all) of this rice is grown on large-scale irrigation areas, which are getting a great deal of emergency response support to keep the water on. Plus, China has ample reserve rice and a fairly diverse set of trade partners in SEA that it could look to if needed.
9/17
9/17
@Even_Pay Peanut - Anhui and Sichuan together account for 7% of national peanut production, and cooking oil prices have already been a point of concern for Beijing this year. 10/17
@Even_Pay Corn – Sichuan and Anhui each account for about 2% of nat'l corn production. Bulk of this is also likely to be w/n irrigation districts, and though marginal damage to 4% of the nat'l corn crop wouldn't usually be worth flagging, corn is already under pressure. 12/17
@Even_Pay That’s for a variety of reasons including some disruptions to planting in locked-down Jilin province this spring, overly cool weather across China's NE (may marginally impact the ~40% of production there) and the impacts of Russia's invasion of Ukraine on China corn imports.13/17
@Even_Pay Rapeseed– if drought conditions persist for few more months, could have major impact on rapeseed production. Drought affected region accounts for ~80% of China's total production, but this crop typically planted in fall/harvested in June, so got a while before it's a concern14/17
@Even_Pay And finally, one more relevant detail – it looks like river-sea shipping along the Yangtze through Wuhan port has become unviable already. Usually open through October. That means seaborne cargos–including many already booked–are going to need to unload closer to the coast.15/17
@Even_Pay Wuhan handles a lot of the bulk ag commodities imports for central and western China these days during the months when its port is open, so it may have an impact on ag trade. 16/17
Loading suggestions...