What happens if there is a supply shock across a number of grain markets coupled with strong demand? The answer is easy, prices will rise across all grain markets.
A Bloomberg story on pork binge could be driving soybean prices higher. The demand for protein through pork has doubled in the last two decades as the Chinese economy has grown. by over double. The average person in China will consume just under 40 kilograms of pork. This growth is expected with any rise in disposable income. The result of increased pig production in China is that the animals have to be fed. Feed can come in the form of corn and or soybeans and with high prices in corn, the demand for soybeans will increase further. It takes 2.8 pounds of feed to produce one pound of pork.
The expectation is that soybean demand will increase 33 percent to 66.9 million metric tonnes which is more than what is grown in Iowa, the largest soybean producer. Iowa produced over 13 million tonnes last year. This is not much different than the demand for copper, coal, or other commodities. The raw inputs for protein production is needed in large quantities. China consumes one out of every four tonnes of soybeans produced and it imports about 60% of the global exports in soybeans.
Growing more soybeans may not be the answer in the short-run because acreage has been committed to corn, a better cash crop. Soybean acreage will be down this year in the US by about 1%. It is unclear whether China has the capacity to increase domestic supply.
The demand and supply shocks to grains will continue.
A Bloomberg story on pork binge could be driving soybean prices higher. The demand for protein through pork has doubled in the last two decades as the Chinese economy has grown. by over double. The average person in China will consume just under 40 kilograms of pork. This growth is expected with any rise in disposable income. The result of increased pig production in China is that the animals have to be fed. Feed can come in the form of corn and or soybeans and with high prices in corn, the demand for soybeans will increase further. It takes 2.8 pounds of feed to produce one pound of pork.
The expectation is that soybean demand will increase 33 percent to 66.9 million metric tonnes which is more than what is grown in Iowa, the largest soybean producer. Iowa produced over 13 million tonnes last year. This is not much different than the demand for copper, coal, or other commodities. The raw inputs for protein production is needed in large quantities. China consumes one out of every four tonnes of soybeans produced and it imports about 60% of the global exports in soybeans.
Growing more soybeans may not be the answer in the short-run because acreage has been committed to corn, a better cash crop. Soybean acreage will be down this year in the US by about 1%. It is unclear whether China has the capacity to increase domestic supply.
The demand and supply shocks to grains will continue.
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