Monday, February 9, 2009

China's drought

This is a picture of a riverbed in Zhengzhou, China. 43% of China's wheat crop has already been hit this year.

Today, the fertilizer stocks reversed down in the market. It's a head fake. They have room to run on the upside. Don't get shaken out. This was just traders trying to make the "charts" say something that isn't there.

But if you need a fundamental story, read this about China, who have resorted to shooting rockets into clouds to induce it to rain:

Soldiers loaded rockets with cloud-seeding chemicals over the weekend and fired them into the sky over drought-stricken areas.

The clouds opened and it rained briefly in some of the hardest hit provinces in northern and central China, but not enough end to the drought. The clouds were too thin and moving too fast to do much good.

In the longer term China plans to divert water from its two longest rivers to drought-stricken areas, although it will remain difficult to get water to mountainous and remote farmland. Many farms in China still rely on rainfall, because irrigation systems are poor.

Some places are getting 80 percent less rain than they normally do, according to the Flood Control and Drought Relief Office.

Since November, northern and central China has had little precipitation. Many places have not had rainfall for more than 100 days.

State-run media reports 4.4 million people and 2.1 million livestock are facing water shortages. China's winter wheat crop is most seriously threatened. The drought has hit almost half of the country's winter wheat fields. Rice crops are also affected.

The Chinese government has allocated $12.7 billion dollars for farmers to buy relief materials, including agricultural tools and fertilizer, in an effort to help salvage their crops.

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