The shortage in international markets, caused by drought in some grain producing nations, coupled with rising enthusiasm to use grains for making biofuel, have also contributed to the rising prices in China, experts said.

The latest forecast for world wheat output in 2006 stands at roughly 592 million tons, a drop of nearly 33 million tons, or 5.3 per cent, from 2005, the Food and Agriculture Organization said last Thursday.

In contrast, China's wheat output increased by 7 per cent year-on-year to hit 105 million tons in 2006, slightly exceeding demand, according to Wang.

Wheat accounts for nearly 90 per cent of the crops harvested in summer. Summer grain, in turn, contributes to a quarter of China's total grain production, Wang said.

In Shenzhen, the wholesale price of cooking oil increased by 20 to 30 per cent from October.

But rice and flour rose by a modest 4 per cent, according to the local pricing department.

Of the cooking oils, bulk colza and soybean oil led the price hike, rising 37.9 per cent and 33.3 per cent.

In Shanghai, the price of refined oil increased 12-13 per cent from a month earlier, with soybean oil showing the biggest gains, according to the Shanghai Economic Committee.

Chen Hong in Shenzhen and Jin Jing in Shanghai contributed to the story

(China Daily 12/13/2006 page1)

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