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MGEX Research

RSS By: Joe Victor, AgWeb.com

Joe Victor is a Business Development Specialist with Minneapolis Grain Exchange, Inc., where he monitors cash grain activity and cash grain opportunities. He provides marketing advice through this blog.

Serving 1.3 Billion

Feb 25, 2009

 

 
Corn and soybean meal use has fallen for feed use within the United States for 2008/09 as a result of poor economics for major meat/milk corporations/producers. It comes as little surprise corn for US feed use has fallen 11% while soybean meal use for feed has dropped 5% year on year. While the US may be experiencing adverse economic conditions and limiting meat/milk protein intake, the same can not be written for China’s 1.3 billion population. With China’s unemployment rate at 1.53% vs the US’s 7.6%, meat and milk consumption within China may not warrant as drastic cut to its corn and soybean meal use.
 
Whether milk, poultry, beef or pork, China demand remains in a notable upward trend. The year on year increase from 2008 to projected 2009 for fluid milk consumption is up 5.3%, poultry up 8.6%, beef and veal up 1.6% and swine meat up 2.9%. More impressive is since 2004 each sector has been on a very positive growth trend with pork up 7.3%, beef up 13.3%, poultry up 40% and milk consumption up a staggering 67.5%!
            Now consider the fact each of these sectors require corn and soybean meal fed to produce the meat/milk product. Conversion rates are as follows; to produce one pound of poultry meat, it requires 1.8 pounds of grain, for pork the rate is 2.75 pounds of feed fed to produce one pound, for beef the rate is 6 pounds of grain for one pound of production and to produce one gallon of milk, 2.8 pounds of grain is required. Granted the feed conversion rates for China may not be as efficient as the US but none the less, corn and soybean meal is required for strong production.
            Of equal interest are growth trends of major world meat/milk consumption finds since 2004, India’s milk consumption up 22.7%, USA up 12.7% and Brazil up 30%. With respect to poultry, USA consumption up 5.4%, EU-27 up 11.8%, Mexico up 22% and Brazil up 28%.
            In conclusion, is the optimistic outlook for long term sustained growth for meat and milk protein needs within and outside of the US and the corn and soybean meal required.
Without question, the US may be temporarily reflecting less feed use but major consuming countries may not be following the same pause.
            What are your thoughts, how will the growth trends be met? Can major world consumers of meat and milk protein continue to sustain growth trends on its own or will they continue to draw upon on US resources?
Feel free to call us 800 551 4626 with your ideas
           
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Allendale’s 20th annual Acreage Survey begins Feb 23rd. Allendale, Inc.
 
 
 
The thoughts expressed and the basic data from which they are drawn are believed to be reliable but cannot be guaranteed. Any opinions expressed herein are subject to change without notice. Hypothetical or simulated performance results have certain inherent limitations. Simulated results do not represent actual trading. Simulated trading programs are subject to the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. Commodity trading may not be suitable for recipients of this publication. This is not a solicitation of the purchase or sale of any commodities. Those acting on this information are responsible for their own actions. Any republication, or other use of this information and thoughts expressed herein without the written permission of Allendale, Inc., is strictly prohibited. Allendale Inc. c2009
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