Corn consumption in China, the world’s second-largest user, remains resilient even after prices rallied to a record in Chicago, according to DWS Investments, which invests $3.4 billion in agriculture-related businesses.
“We still have strong demand from countries like China,” Bill Barbour, an investment specialist for the DWS Global Agribusiness fund, said in a Bloomberg Television interview today. “There’s not been much demand destruction.”
Corn, used in feeds and ethanol production, rallied 24 percent this year, reaching a record last month, as the driest summer since 1936 in the U.S. Midwest damaged crops. Barbour’s assessment adds to signs that Asian nations may sustain demand for food while costs increase and economic growth slows.
There is no correlation between economic growth and food demand, said Barbour, citing U.S. Department of Agriculture data that show no declines in global demand for grains and oilseeds in recession-hit years in 2008 and 2009, and in the early 1990s.
Corn touched a record $8.49 a bushel on Aug. 10 and traded at $7.9825 on the Chicago Board of Trade today. Soybeans, which traded an all-time high of $17.89 a bushel yesterday, have surged 46 percent this year, beating all other commodities on the Standard & Poor’s GSCI Spot Index of 24 raw materials. The rallies helped boost global food prices 6.2 percent in July.
Corn shipments to China rose 36 percent in July from a month earlier to a six-month high, according to customs data compiled Bloomberg. Imports in the first 10 months of the 2011-2012 marketing year totaled 4.2 million tons, compared with a record 4.3 million tons in the whole of 1995-1996, data show.
U.S. corn production may total 10.779 billion bushels, 13 percent smaller than last year, the USDA said Aug. 10. Yields may drop to 123.4 bushels an acre this year from 147.2 last year, according to the USDA.
“The corn yield is likely to be below what the USDA is currently forecasting,” Barbour said. “There’s a risk that some of the supply-chain managers may not actually be able to delivery grains to their customers.”
DWS Investments managed $312.2 billion globally as of June 30, according to the company’s web site. The firm is the mutual-fund unit of Deutsche Asset Management.
-With assistance from Anand Menon in Singapore and Jack Kaskey in Houston. Editors: Jake Lloyd-Smith, Jarrett Banks