February 2, 2011

China's demand to sustain high feed grain prices

Rabobank forecast that Chinese demand for feed grain will keep prices high this year.

The agribusiness bank's annual report, Australian Agriculture in Focus, points to high prices for most commodities, and a strong Australian dollar this year. However,

it says the situation is volatile, because developing countries might put up trade barriers to protect local production.

China is not revealing how much feed grain storage it has got, to feed a growing number of livestock in intensive housing, says Rabobank's Justin Sherrard.

"We've seen China reporting stocks of corn in positive territory, yet China is buying corn," he said. "If stocks were where the Chinese say they're at, then it's unlikely you'd see China buying in the way that it has been buying, so one can only conclude that stocks are probably not as good as they're reporting."