What is the real story on US corn demand?
Apr 14, 2013
The wild card moving forward (at least during the next few years) will obviously be Chinese "demand." In this last report the USDA bumped Chinese corn imports higher from 2.5 to 3.0 million metric tons. There is actually talk circulating once again in the industry that China might soon import double that number. There is no debating the fact China's demand for feed has exploded. Do you realize more than a quarter of ALL the meat produced worldwide is now eaten in China. In 1978, China’s meat consumption of 8 million tons was 1/3rd that of the US (who consumed about 24 million tons annually). But by 1992, China had overtaken the US as the world’s leading meat consumer—and they haven't looked back. This may be hard to believe but China’s annual meat consumption is now more than 71 million tons, basically double that of the United States. As I am sure you are aware "pork" is China’s meat of choice, accounting for nearly three fourths (just over 52 million tons) of their total meat consumption. To give you a better idea of just how much pork they are consuming, here in the US we eat about 8 million tons. In order to meet this type of demand China has now become home to more than half of the world’s total number of pigs, over 475 million!!! China has also just recently passed the US in total poultry consumption, now over 13.5 million tons annually. They are however still lagging in beef consumption. From what I am told China consumes about 6-million-tons of beef compared with 11 million tons here in the US. You might ask, why hasn't beef demand exploded as well in China? From what I can gather they get a bigger bang for their buck out of the pork and poultry. Most estimates show cattle sitting in Chinese feedlots chew up about 7 pounds of grain for each pound of weight they gain. For pigs, the feeding ratio is 3 to 1, and for chickens it is 2 to 1. With 1/5th of the world’s population and limited land and water, China has had to rely heavily on the more-efficient forms of animal protein. Therefore less beef and more pork and poultry, the question now is how much more will China's demand for meat protein continue to grow? And at what pace will growth occur? You also have to ask yourself, even if Chinese corn imports surge to 6 or 7 million metric tons (a new record), how much will actually come from the US? Keep in mind the Chinese have invested a lot of money in agriculture in Argentina, Brazil, Ukraine, etc... We will no longer be their exclusive provider. I hope this helps give you a better idea of the questions being asked by the trade in regards to overall corn "demand." If you would like to get a better understanding on the grain markets and read more of Kevin Van Trump's report, please