(Bloomberg) -- A cold front has caused temperatures to plunge across northern China, sparking concern about damage to fruit and vegetable crops and driving investors to bet on production losses.
Apple futures on the Zhengzhou Commodity Exchange have surged about 8% in slightly under two weeks as many regions experienced an abrupt shift from warm to cold weather. Some northern areas even experienced heavy snowfall.
China is one of the top fruit and vegetable producers, accounting for roughly a third of the world’s supply. The agriculture ministry has warned that the sharp drop in temperatures can cause harm to apple trees in the main producing regions of Shaanxi, Shanxi and Xinjiang. It also said yields of fruit trees — such as pears, peaches, citrus and grapes — may be adversely affected.
The cold front is expected to continue, with widespread rain and snow forecast in northern and central regions. While cold fronts are not unusual in April, the current one appears to be lasting longer with heavier rainfall than usual.
This is making traders and investors bullish. Chinese apple futures, listed in 2017, are popular with speculators. Right now the market is fervently betting on the drop in temperatures and potential output cuts, according to Wang Xiaoyang, a senior analyst with Sinolink Futures.
“Production in Shanxi and Shaanxi has indeed been affected, but apple futures are mainly under the influence of speculative trading,” Wang said.
The cold front is just the latest in a string of wild weather events China has seen in recent months. Yunnan, a key aluminum hub, suffered its driest spell in nearly a decade, just months after Sichuan recorded the worst drought since the 1960s. Sandstorms have been frequent in Beijing since early March.
The Week’s Diary
Tuesday, April 25
- Shanghai auto show, runs through April 27
- SMM Intl Copper Summit in Yantai, Shandong, day 2
- EARNINGS: Chalco, CGN Power, Eve Energy, WH Group
Wednesday, April 26
- Shanghai auto show, runs through April 27
- CCTD’s weekly online briefing on China coal, 15:00
- SMM Intl Copper Summit in Yantai, Shandong, day 3
- EARNINGS: Anhui Conch, HKEX, Yunnan Energy, Xinjiang Goldwind
Thursday, April 27
- Shanghai auto show concludes
- China industrial profits for March, 09:30
- EARNINGS: Angang Steel, Baosteel, BYD Co., China Coal, China Oilfield Services, Cnooc, Ganfeng Lithium, Gotion High-Tech, Hesteel, Huayou Cobalt, Longi Green, Maanshan Steel, Metallurgical Corp. of China, Sinopec, Shandong Steel, Tongling Metals, Zijin Mining
Friday, April 28
- China weekly iron ore port stockpiles
- Shanghai exchange weekly commodities inventory, ~15:30
- EARNINGS: China Shenhua, China Three Gorges, China Yangtze Power, Cosco Energy, Cosco Holdings, Jinko Solar, Ming Yang Smart Energy, PetroChina, Tianqi Lithium, Trina Solar
Saturday, April 29
- Nothing major scheduled
Sunday, April 30
- China official PMIs for April, 09:30
On the Wire
With China’s economic recovery well on track, top leaders will likely turn their policy focus now to boosting business confidence, increasing jobs and strengthening the property market without adding extra stimulus.
©2023 Bloomberg L.P.
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