China faces a difficult harvest season as a severe energy crisis undermines production growth prospects, which could trigger a new surge in global agricultural and food prices, BAM reported, citing Bloomberg.

Harvesting from a leading agricultural producer is in full swing, while the country faces a power shortage in industrial centers that threatens to slow economic growth. Among the hardest hit are northeastern provinces such as Jilin, Liaoning and Heilongjiang, where about half of China's corn and soybeans are grown.

The crisis raises concerns that it will be difficult for China in 2021 to process crops from corn to soybeans, peanuts and cotton after some businesses were asked to suspend or cut production to save energy. Over the past year, the country has imported a record amount of agricultural products due to internal shortages, which have pushed domestic and world food prices to multi-year highs.

Currently, due to power shortages, soybean processors in the northern regions have closed, affecting some operations of companies such as Louis Dreyfus Co., Bunge Ltd. and divisions of Wilmar International Ltd. in Ihai Kerry. Chinese brokerage company Huatai Futures Co. also worried that power shortages could reduce the productivity of corn processors, which produce products such as starch and syrup.

Several companies have bought backup generators in the event of extended power outages, Futures Daily reported, citing traders and manufacturers. Electricity is needed to dry crops, an important process before storage and sale. Corn and peanut supplies can deteriorate in quality if not processed on time.

Let us remind you that export prices for sunflower oil have increased in Ukraine.

UkrAgroConsult