U.N. warns China drought could pressure wheat prices

A record drought in China’s major wheat producing areas threatens to push world food prices beyond their current high level, the United Nations warned in a report Tuesday, adding to growing concern about how the rising cost of food is affecting the poor around the globe.

China, the world’s largest wheat producer, consumes almost all of what it grows and keeps roughly 55 million tons in reserve. But the prospect of a failed winter wheat crop might prompt the country to import grain on a scale that could put further stress on world prices, the U.N. Food and Agriculture Organization warned.

The FAO’s world food price index, a composite indicator of the cost of a basket of goods, is at its highest level since it was introduced in 1990. Wheat prices have roughly doubled since mid-2010, according to International Monetary Fund data.

Rainfall has been more than 30 percent below normal since October across five northern provinces that account for about two-thirds of Chinese wheat production, the FAO reported. Shandong province, China’s second-largest wheat-growing area, has had less than half an inch of rain since September and is heading for its worst drought in 200 years, according to reports from China’s official news agency.