May 20, 2010

Corn and soy demand to rise in China

Demand for corn and soy in China, will climb as the expanding economy raises incomes and improves diets, said an executive at Cargill Inc.

The country's annual soy consumption will rise as much as 8% for the next three to four years, while corn will gain about 5% 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% this year, Li Daokui, an adviser to the central bank said April 24. China buys more than half of globally traded soy and may become a net corn importer this year, as its citizens eat more meat, supporting global prices for bulk grain products.

The country's soy imports have outpaced forecasts for five years now, Day said. The USDA this month revised an import estimate for the marketing year through September 30 to 46 million tonnes from 43.5 million tonnes in April, while forecasting 49 million tonnes for 2010-2011.

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

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 standardised, 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.