China Will Be Forced To Buy More US Farm Goods This Year, Top Ag Think Tank
Reuters quoted Chicago-based consultancy AgResource Co. president Dan Basse who expects Chinese imports of corn and soybeans will continue to be sourced from the US in more significant amounts. This is excellent news for American farmers and may result in a continuation of upward prices.
Grain demand from China in global markets has created upward momentum in corn and soybeans prices since late summer. Earlier this month, corn prices hit 6-1/2 year highs amid increasing Chinese demand and export disruptions in South America.
Basse, who spoke at the Paris Grain Day conference earlier this week, said China’s soybean imports could rise to 110 million tons in the 2021/22 crop year, exceeding the 103-105 million tons in the 2020/21 crop cycle.
Reuters shows China has already imported a record amount of soybeans in 2020, breaching the 100 million ton mark.
While China rebuilds its pig herd, decimated by pig ebola where at least half of the country’s herd was wiped out, this will undoubtedly drive grain (corn and soybean) imports higher in the 2021/22 crop year.
“We’ve been talking for years about trying to find a new demand driver and that demand driver is now coming from our friends in China,” Basse said.
Rosa Wang, an analyst with Chinese consultancy JCI, told the conference that the phase one trade deal would benefit the US as Beijing will be forced to source more farm goods from the West.
Besides corn and soybeans, Wang expects China to increase wheat purchases, a move that would help it abide by the minimum purchase requirements for farm goods laid out in the trade agreement.
Basse said supply woes and increasing Chinese demand for grains in global markets could continue to push up prices. This would be beneficial for US farmers, increasing their potential margins, allowing them to plant more corn and soybeans in the upcoming growing season.
He forecasted soybean prices could reach $15-$17 a bushel and corn $5.70-$6 this year.
… and of course, there’s always a downside to rapid food inflation.
We recently discussed how food price inflation has risen for the seventh consecutive month.
Thu, 01/28/2021 – 10:35