China Corn, Soybean Demand to Climb, Executive Says

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

Annual soybean consumption will increase by as much as 8 percent in the next three to four years, while corn demand will gain by about 5 percent a year as the livestock industry grows, boosting use of high-protein and energy-rich feed, said Robert Day, general manager of 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 the world’s soybean exports and may become a net corn importer this year, as its 1.3 billion people increase meat consumption, supporting prices for bulk grain products.

The country “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.

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, and predicted 49 million tons for 2010-2011.

Demand Climbs

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

“China’s grain demand will probably steadily climb and won’t be easily affected by other economic factors,” said Wang Chen, director of research at Wanda Futures Co. in Beijing.

Measures by China to cool economic growth, such as restricting real estate transactions, will curb prices, and the desire to buy will increase, Wang said.

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

China, the second-largest corn producer, now uses a more standardized, formulated compound feed, 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 369,000 tons of corn to China May 13, after an initial 115,000 tons announced April 28. The country was able to produce enough corn to meet its own needs before drought cut output 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.

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