March 29, 2012
Despite China's economic slowdown, demand for Argentine soy for cattle feed remains strong due to high beef consumption, an official said on Wednesday (Mar 28).
China's strong buying of animal feed has defied forecasts that imports would slow along with the country's downshift in economic growth, reports Reuters. Argentina is the world's No. 1 exporter of soymeal, used as animal feed, and its No. 3 soy supplier.
The United Nations says demand for both products has grown faster than expected, as China's newfound love of steak appears stronger than the economy itself.
Argentine Agriculture Minister Norberto Yauhar on Wednesday opened a regional meeting of the UN Food and Agriculture Organization (FAO) by telling reporters that Chinese demand for Argentine grains is here to stay.
"Over the years ahead, the market will continue to be driven by China," he said.
"We have a very good trading system with China," Yauhar added. "They will keep importing Argentine soy and derivatives."
He said Argentina - with its vast Pampas farm belt, where growers have embraced genetically modified seed technology in a bid to improve yields - is "undoubtedly" looking to increase exports to other markets as well.
Argentina expects a 2011/12 soy crop of 44 million tonnes, after a December-January dry spell dashed original expectations of a 53 million tonne harvest.
Soy futures on the Chicago Board of Trade explored six-month highs earlier this week as concern over drought-hit South American supplies combined with solid demand to push prices up.
The world is counting on Argentina to help meet global demand for food, which the United Nations expects to double as global population grows to an estimated 9 billion by 2050.
Grains exporters with operations in the country include Cargill, Bunge, Molinos Rio de la Plata, Noble and Louis Dreyfus.
Despite the recent strong demand, commodities traders will keep a close eye on the economy of key buyer China, whose slowdown is linked to the debt crisis in Europe, its single biggest export partner.
