Thursday, June 6, 2013

China corn, soy imports to fall short of US hopes

by Agrimoney.com

China's imports of corn will grow over the next decade, but not by as fast as some other commentators believe, being outpaced by those of cheese, and not far ahead of beef, leading economists said.

The Organisation for Economic Co-operation and Development and the UN Food and Agriculture Organisation, in a much-watched annual outlook on world agriculture, highlighted that China, the world's most populous country, will become increasingly more dependent on food imports.

While annual demand growth will slow to 1.9% over the next decade, from 3.4% over the past 10 years, reflecting the extent of the improvement in diets already achieved, the rate of increase in production will slow too, to 1.7% per annum from 3.2%.

"China's consumption growth will slightly outpace its production growth," the report said.

"The challenge is clear - feeding China in the context of its rapid economic growth and limited resource constraints is a daunting task."

'Environmental stress'

Meeting demand will require large increases in imports of many agricultural commodities, including corn and oilseeds, as China struggles to maintain self-sufficiency in production of pork, its favoured meat.

Producing virtually all of its own pork "will be a challenge" even with a slowdown to 1.6% a year in growth in consumption.

"Management of land and water constraints, for example, will play a major role in China's ability to remain self-sufficient.

"In the next decade, China's pig population will rise to almost 550m head, further stressing the environment, often in areas surrounding cities."

'Strict control'

However, while imports of coarse grains – mainly corn – will more than double to 13.2m tonnes by 2022, that is a far smaller increase than observers including the US Department of Agriculture foresee.

The USDA predicts China's corn imports alone hitting 19.6m tonnes by 2022-23, with barley buy-ins reaching 3.3m tonnes on top.

The FAO and OECD said that annual growth in China's use of coarse grains would slide to 2.1% over the next decade, from 5.2% in the last, "largely because China will exercise strict control over the industrial usage of corn".

"Production of ethanol from maize will remain less than 1.5bn litres."

The groups were, relatively, downbeat on imports of oilseeds too, seeing growth to 82.8m tonnes in 2022 from 65.1m tonnes this year – representing a slump to 2.6% from 13.3% in the annual growth rate.

"Import growth should slow down compared to the last decade, on account of the deceleration in growth of the crushing sector, as demand growth for both protein meal and vegetable oil eases, from a higher base," the report said.

The USDA foresees China's imports of soybeans alone hitting 102.9m tonnes in 2022-23.

Trade prospects for China, as the top buyer of soybeans and prospectively a huge purchaser of corn, are particularly closely watched in grain and oilseed markets.

'Slow down significantly'

The OECD and FAO, which five years ago were among the first to highlight the potential squeeze on food supplies caused by population growth and productivity slowdowns which has fuelled the revival in the agriculture sector, were also downbeat on prospects for China's sugar imports, which they saw stagnating at about 2.5m tonnes a year.

Extra beet and cane plantings, and yield growth, will allow the country to meet most of its increasing demand.

"China's recent import growth should slow down significantly compared to the last decade, and remain below the peak reached in 2011."

Purchases, and production, of cotton will slow too as China's rising labour costs shrink its textiles industry.

"While domestic consumption of textile products is likely to increase, the intensification of competition in cotton spinning products, especially from India and other countries with low-cost labour, the use of cotton in China will decline," the report said.

Diary, beef booms

The FAO and OECD were more upbeat on prospects for dairy imports, with domestic milk production slowing to 2.4% a year, from 6.9% a year over the past decade, behind growth in many milk products.

Consumption increases will be "mostly driven by income levels and the growing influence of multinational companies, which are introducing new retail products and processing efficiencies, as well as government programmes that promote, for example, school milk consumption".

Cheese imports will soar by 10% a year to top 100,000 tonnes in 2022.

Imports of beef will also soar, as China's low consumption rates, of 4 kilogrammes per person per year, catch up with the average in OECD countries of 14 kilogrammes per person per year.

"Bovine meat will become the fastest growing [meat] import sector with a growth rate of 7% per annum."

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