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China Agribusiness Report Q3 2009Published by: Business Monitor International Published: Jun. 9, 2009 - 65 Pages Table of Contents
AbstractIn BMI's China Agribusiness Report for Q3 2009 we introduce the new Soybean Outlook. In it we discusshow China's rapidly developing soybean sector has been coping with the turbulence in the world marketfor the commodity over the past year.The growth in China's soybean consumption over the past year has been meteoric. In the decade up to2008, consumption more than tripled and China moved from being pretty much self-sufficient to beingthe world's biggest importer by far. This has been driven by the development of the country's livestocksector. With meat consumption expected to grow strongly beyond the current economic problems,demand for soybean will climb ever higher. As for many other commodities, 2008 was a roller-coaster year for soybean prices. The rapid rise inprices starting in late 2007 and continuing until mid-2008 caused the government to worry about theimpact on the domestic livestock sector and cut import duty by two percentage points to 1%. China'ssoybean farmers meanwhile expanded the area planted in the hope of reaping the benefits of the highprices. By the time harvesting season came around, however, prices had plummeted. Governmentintervention with a programme to purchase 5mn tonnes of soybean at around 15% above the market pricepleased nobody. Farmers griped about difficulties accessing the scheme, while processors complainedthat the higher prices were impacting their competitiveness. The rapid rise in demand has led to some major changes in China's soybean sector. Crushing plants havesprung up around port cities to meet incoming shipments. Foreign involvement in the sector is also high.The combination of rapidly rising imports and high foreign ownership in the soybean processing sectorhas unsurprisingly sparked concerns about the impact on food security. However, with China's everwealthierconsumers hungering for more meat, it seems there is little the government can do to stem theflow without seriously damaging the country's livestock sector. We therefore see continued strong growthin soybean consumption throughout our forecast period to 2013. Away from soybean, the expected slowdown in Chinese economic growth - BMI is now forecastinggrowth in 2009 of 5.6% year-on-year, down from 9.0% in 2008 and 12.0% in 2007 - will see somechanges in demand patterns for agricultural goods. We expect demand for the staple rice to pick up asconsumers cut down on more expensive foods. Growth in meat consumption will slow. We forecast both poultry and beef consumption to fall in 2009 asconsumers cut back their food budgets. Pork consumption should hold up better owing to the fallingprices. Despite these short-term set backs, we expect demand for meat products to grow strongly over ourforecast period as the economy picks up speed again. For most commodities, we expect growth inconsumption to increase strongly in the later years of our forecast period to 2013 after slowing in 2009and 2010. The notable exceptions will be the staples wheat and rice, for which we expect growth to turnnegative when the economy picks up as consumers have more money to spend on varying their diets. Get Full Details About This Report >> |
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