China’s Appetite For Feed Grains Could Mean It Will Soon Enter The World Market

“China’s Appetite For Feed Grains Could Mean It Will Soon Enter The World Market in much the same way it did for soybeans, putting pressure on U.S. corn prices and food prices,” Lester Brown, president of Earth Policy Institute in Washington, D.C., said this week in an interview with Feedstuffs.
“We can anticipate substantial further rapid growth in China’s grain consumption, most of it to expand beef, dairy and poultry production,” Brown said, noting that U.S. grain industry and international financial institutions analysts now believe that China’s entry into the world grain market is “inevitable.”
But, he warned, when the new demand from China is combined with U.S. grain demand and the use of grain for biofuel, “we begin to see a real price crunch in the making.”
Brown noted that unconfirmed reports in recent days point to China’s “quiet” steps to buy U.S. grain. If China imports only a fifth of its 400 million ton annual grain consumption, it would amount to imports of 80 million tons of corn. He agreed that U.S. Grains Council estimates of 9 million tons of Chinese purchases within a year were “definitely a possibility.”
He said he believes that China might import as much as 10 million tons of grain by the latter part of this year, including purchases of barley for brewing and wheat from Australia, and that could increase to 25 million tons by 2015. However he noted the difficulty of predicting Chinese demand because of the difficulty of getting reliable grain information from China, but said “if they come into the world market they will have to come to the U.S. because the U.S. is far and away the world’s largest grain exporter.”
Brown, a veteran agricultural economist who spent many years at the Worldwatch Institute before founding the Earth Policy Institute in 2001, is sometimes viewed as an alarmist, but few doubt his global view, Feedstuffs says. He said the U.S. would be unable to limit Chinese demand for grain “because China is our banker” and the era of cheap American food “may be about to come to an end.”

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This entry was posted in Markets.

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