The U.N. Food and Agriculture Organization said the North China Plain drought is already putting pressure on wheat prices in China, with average flour prices rising more than 8 percent in January compared to the previous two months.
The impact on global wheat production and prices was unclear. FAO said Tuesday that China hadn't exported wheat for the past two years, although there were some exports before 2008 of about 1.5 million tons.
The North China Plain region produces most of China's winter wheat, which is harvested in June. Low precipitation has meant there hasn't been enough snowfall to protect dormant plants from frost, and has affected soil moisture needed for the growing season, FAO said.
FAO said the situation could become critical if a spring drought follows the winter drought or if temperatures this month plunge. But it also noted that temperatures so far have been moderate, that the government had increased irrigation to the region and allocated $15 billion to support farmers and subsidize diesel, fertilizer and pesticides.
Already, a large part of the harvest area - some 5.16 million hectares of the 14 million hectares planted - may have been affected, FAO said. The main provinces affected are Shandong, Jiangsu, Henan, Hebei and Shanxi.
FAO said the drought had also affected some 2.6 million people and 2.8 million livestock "due to the shortages of drinking water."
The United Nations has sounded the alarm about rising commodity prices, particularly for wheat, warning that social unrest is likely, such as that seen in Tunisia and Egypt.
Wheat prices shot up most sharply in August when Russia imposed a wheat export ban after severe drought hurt harvests across the region. In October, Ukraine, another major grain exporter, imposed quotas on exports because of the drought.
FAO's forecast for 2010 wheat production stands at 648 million tons, 29 million tons less than predicted in its June report, blamed mostly on the sharp fall in the production in Russia that offset improved prospects in Argentina, Australia and the U.S.