Grain Demand - It's All About China - 23 October 2012

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Tuesday 23rd October 2012.

Sarah Mikesell
Senior Editor

Editorial: Grain Demand - It's All About China

Greetings from St Louis, Missouri, USA! I'm attending the Doane's 2012 Agricultural Outlook Conference. There was a ton of great information shared today, so watch headline news over the next several weeks for more coverage from the conference.

"It's all about China" - that was the key message from Rich Pottorff, Doane chief economist. Without a doubt, demand from China is driving and supporting the global grain market.

Pottorff offered a global outlook, noting that from 2000-2006 there was a deficit of 191 million tonnes in world grain production versus use. From 2007 to 2009, that switched to a surplus of 171 million tonnes. However, over the last three years, we've switched again to a deficit of 71 million tonnes mostly due to weather issues around the world.

Yield is rising at 1.3 per cent per year, while world population is rising at 1.12 per cent per year, he said.

Many say we are out of cropland, he noted, but the world's major crop area has seen a sharp increase in the last 12 years.

Corn - UP 93.9 million hectares
Soybeans - UP 81.8 million hectares
Rice - UP 15.6 million hectares
Cotton - UP 5.2 million hectares
Wheat - UP 4.2 million hectares
Rapeseed - UP 23.7 million hectares
Sorghum - DOWN 6.2 million hectares
Total (13 major crops) - UP 190.5 million hectares

Where in the World Is Crop Area Increasing?

From 2000 to 2012, the following countries increased their crop acreage.

Brazil - 41.5 million acres
Argentina - 23 million acres
Ukraine - 19 million acres
China - 16.6 million acres
India - 10.6 million acres
Kazakstan - 10.4 million acres
Iran - 5.7 million acres
Tanzania - 5.4 million acres
Paraguay - 5.2 million acres

South America and Africa are expected to convert even more acreage into crop land. And the US is expected to gain more land out of CRP (Conservation Reserve Program) reductions.

Demand from China?

Demand for corn from China is rising at nearly 5 per cent per year while yields are rising at about 1.5 per cent per year. Corn area in China increased 4.8 million hectares over the last 5 years.

Pottorff questions whether China can add another almost 4 million hectares in the next five years. He said if the area holds steady, China will have a 30 million metric tonne deficit by 2017-2018.

In 2000, China's land use was diversified among its three corn core crops - rice, wheat and corn. While those three crops remain the major players, China has now shifted corn to the leader position in an effort to meet their growing demand for livestock feed.

To read more from coverage from day one of the Doane conference, click here.

Have a great week!

Crop World Global 2012 - 6 & 7 November 2012

This Week's Articles and Analysis

What Do RIN Values Tell Us about Biofuel Mandates?
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Palm Oil a Massive Source of Carbon Dioxide
Expanding production of palm oil, a common ingredient in processed foods, soaps and personal care products, is driving rainforest destruction and massive carbon dioxide emissions, according to a new study by Yale and Stanford researchers.

Impacts of Sustainable Agriculture Unknown
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What is Soil Compaction, Where Does It Occur?
Soil compaction occurs when particles are compacted and the soil density increases. In a normal soil, the soil particles and pore spaces are very close to 50/50, but through agricultural practices, cultivation and wheeled traffic, those soil particles can become compressed closer together. This means that in the same volume there will be more soil and less pore spaces.

Unusual Genetic Structure Confers Major Disease Resistance Trait in Soybean
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