Thursday, May 20, 2010

Soybeans, Corn, Wheat Climb as Weather May Delay China Planting‎

Demand for corn and soybeans in China, the world’s biggest consumer of grain and meat, will climb as the expanding economy raises incomes and improves diets, said an executive at Cargill Inc., the largest U.S. agricultural company.

The country’s annual soybean consumption will rise as much as 8 percent for the next three to four years, while corn will gain about 5 percent a year as the growing livestock industry demands high-protein and energy-rich animal feed, said Robert Day, general manager of the company’s south China operations.

China’s economy may expand by 10.9 percent this year, Li Daokui, an adviser to the central bank said April 24. China buys more than half of globally traded soybeans and may become a net corn importer this year, as its citizens eat more meat, supporting global prices for bulk grain products.

China “will continue to create more wealth for its citizens, it will continue to consume more meat, which means it will continue to need more grain and oilseed products,” Day said at an industry meeting in Dongguan May 18.

The country’s soybean imports have outpaced forecasts for five years now, Day said. The U.S. Department of Agriculture this month revised an import estimate for the marketing year through Sept. 30 to 46 million metric tons from 43.5 million tons in April, while forecasting 49 million tons for 2010-2011.

That may have again underestimated China’s demand, Day said, without giving his own forecasts. The country consumes nearly 60 million tons of soybeans a year, the most in the world, according to the USDA.

Oilseed Demand

The country’s surging oilseed demand helped reduce a global surplus in carryover inventory this marketing year, even as output in major producers including Argentina and Brazil jumped to a record, Day said.

The world’s second-biggest corn producer now uses a more standardized, formulated compound commercial feed for the country’s expanding livestock industry, Day said. Backyard livestock operations that use scrap food items or unprocessed grain are being replaced by large-scale farms, according to the Ministry of Agriculture.

The USDA reported a sale of 396,000 tons of corn to China May 13, after an initial 115,000 tons announced April 28. The country had been able to produce enough corn to meet its own needs before drought cut output in major supplying regions last year, Day said.

“If we were to have two bad weather years back to back, China will probably need to import a significant amount of corn,” he said.