September 3, 2010

China's agri imports show substantial increase

In the first seven months of 2010, China's aggregate agricultural import value was up 34% to US$39.2 billion, and the agricultural trade deficit surged 62% to US$13.1 billion, according to the latest data issued by China's Ministry of Agriculture.

The country imports commodities like corn, wheat and soy on a massive scale and seems to be getting accustomed to the reality that being self sufficient in the food space is likely to be extremely difficult even in the face of impressive economic growth, including farm productivity.

Chinese corn demand is expanding as economic growth lifts living standards and wages, boosting consumption of meat, eggs and dairy products. Increased livestock production raises demand for feed, which can be made from corn and soy. Corn demand is forecast to grow 1.9% to 159 million tonnes in 2010-2011 from a year earlier, according to the USDA.

The prices for some key agricultural commodities are expected to remain at a high level in the next few months even if the global economy eventually endures a significant moderation.