Policies that favour expensive corn and cheap pork are changing the type of agribusiness inputs that China chooses to import. Although the demand dynamics of China's vast agribusiness market have grown as expected, the feed-to-meat supply chain components appear to be developing in a different manner than was forecast.
Rising surpluses are leveling out and keeping corn from falling much further. With help from the USDA and rainy harvest time weather, mid October saw corn break its long, brutal decline. It rose to near US$3.60/bushel, some 13% above its early October lows. Nevertheless, medium term fundamentals still point to flat, sagging prices.