China needs to assure 8% growth and food supply

As stated in past papers in this Blog we believe it will be difficult for China GDP to fall below 5-6% in 2009. Confirming our forecasts, yesterday at the opening of China's National People's Congress Thursday, Premier Wen Jiabao promised to bolster the economy and reaffirmed an economic growth forecast of 8% this year -- a level he said is necessary for the nation to avoid social unrest.

At the same time the drought in main productive provinces has been the worst in half a century. The video below is very descriptive about current situation. In best-case scenario the drop in wheat production will be 10% but some analysts are predicting decreases of more than 25% in the cereal.

In addition some analysts are questioning if China really has 60 M tones of wheat reserve as it stated. Recent releases inform of a new stock of only 30 M tones of wheat. Releases

Jim Robinson and José Gobbée for AGRI FOOD THINK TANK