Snow can brighten a cold winter mood, and beautify the landscape, but this recent round of snowfall has not brought relief from the drought in north China. Most Chinese wheat producing areas are still enduring a severe drought, prompting fears of rising wheat prices.

The wheat futures market has grown fast this month, increasing 7 percent in the first trading day after the Spring Festival on February 10, its highest ever. Consequently, the futures price of soybeans, corn and cotton are also growing. Zhang Huaizhong, manager of a flour factory in Zhengzhou, is very concerned about the price hikes.

"We noticed that the wheat futures is growing now," Zhang said. "I think its partly because of the severe drought in China, and increasing food prices around the globe is another reason. Maybe some people are manipulating the price."

On top of price speculation and volatile global prices, fears of a wheat crop failure due to an ongoing drought, is another factor of futures price fluctuation.

"Wheat imports and exports are not that significant in our country, and is largely not affected by the international market," said He Yongtao, manager of China International Futures Co., Ltd (CIFCO). "But the drought affects people's action. We don't know the actual wheat output so far, no one knows whether its falling or not."

But wheat prices have not increased greatly so far. At the National Food Trade Center in Zhengzhou, the country's biggest wheat trade market, the price for a ton of wheat has been kept about 2,000 yuan ($303).

"Food prices are stable compared to the same period before. People's worry about a potential wheat failure affects more both the actual and futures market," said Liu Zhengmin, manager assistant of Zhengzhou National Food Trade Center.

As the drought continues, it's not known how much of an affect it will have on the wheat crops. The State Council is doing everything it can to fight the drought and keep food prices stable.

(CNTV.cn February 14, 2011)