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| According to an Australian report on food demand in 12 Asian countries - representing more than half the world's population - to 2020, beef consumption will increase by 50%, pork 30%, chicken meat 40% and dairy 55%. It requires about two kilograms of feed to produce one kilogram of chicken (live weight), and the ratio is 4:1 for pork and 7:1 for beef. It is estimated that the additional demand for feed grain by 2020 will be 350 to 450 million tonnes - a 20 to 30% increase on present global production. |
The US Department of Agriculture (USDA) said on Tuesday that projected US wheat stocks for the 2007/2008 crop year, have been lowered 32 million bushels this month reflecting higher expected domestic use and exports. At 280 million bushels, this year’s ending stocks are the lowest in 60 years.
The US is the world’s biggest exporter of wheat.
Cold weather has hit yields in Argentina while drought has affected Australia’s wheat production. In Europe, flooding last August damaged European crops.
Wheat for March delivery fell 19 cents to $9.105 a bushel Tuesday, on the Chicago Board of Trade. In earlier trading, futures rose to $9.29 a bushel, just short of the record $9.61 last summer; March corn rose 6.25 cents to $4.24 a bushel, the highest in 6 months while soybeans gained 9.75 cents to $11.355 a bushel - a new 34-year high.
Biofuel production in the US has also boosted corn demand and soyabean stocks will also be lower than expected as demand from emerging countries rises despite record prices.
Corn prices have doubled in the past 15 months even though 93 million US acres of corn were planted this year, the most since 1944 and 19% more than in 2006.
Biofuel production is heavily subsidised and the US government's renewable fuels standard, which went into effect on Sept. 1st, requires that 7.5 billion gallons of corn ethanol to be blended into gasoline by 2012. The Energy Independence and Security Bill, currently before the US Senate is expected to raise that number to 15 billion gallons (equivalent to 10% of current US gasoline consumption) by 2020. It's estimated that an acre of corn yields only about 300 gallons of ethanol, so two fifths of American cropland would need to be dedicated to corn to replace 10% of the gasoline now used.
In recent months, food and energy costs have pushed up global inflation boosted by demand in particular from emerging economies, led by China. On Tuesday, it was reported in Beijing, that food prices had risen 18.2% in the year to November and food inflation has also been a factor in the rise of inflation to 3% in the Eurozone.
China has a weighting of 33% for food in its consumer price index. In poor countries, food can account for 60-70% of the monthly household budget while in the developed world, it is in the range of 10-15%.
“Given the firmness of food prices in the international markets, the situation could deteriorate further in the coming months, leading to a reduction in imports and consumption in many low-income food-deficit countries,” a report from the UN's Food and Agriculture Organisation (FAO), said last month.
The world’s food import bill will rise in 2007 to $745bn (€508bn, £354bn), up 21% from last year. The cost for developing countries will increase by 25.5%, to almost $233bn.
The annual food expenditure of the poorest countries has more than doubled since 2000, according to FAO estimates.
“Soaring grain prices are to blame, especially for wheat, but also freight costs, which have doubled since last year, putting additional pressure on countries’ ability to cover their import expenditures,” according to the report.
US domestic food use for wheat is projected 5 million bushels higher this month for the 2007/2008 crop year and domestic seed use is forecast 2 million bushels higher based on expectations for 2008 crop seedings. Exports are projected 25 million bushels higher on increased foreign imports and reduced supplies and exports for key competitor countries. The projected season-average farm price is raised 30 cents on each end of the range to $6.20 to $6.60 per bushel, reflecting sharply higher cash and futures prices. The projected range is well above the record of $4.55 per bushel in 1995/96.
The USDA said that global wheat production for 2007/08 is lowered 1.0 million tons this month with lower projected output for Argentina, Canada, and EU-27. Partly offsetting are small increases for Azerbaijan, Bangladesh, Serbia, and South Africa. Production in Argentina is projected 0.5 million tons lower this month as a November freeze reduced crop prospects in the major southern producing areas. Good weather and higher yields in unaffected areas is expected to partly offset losses. Production for Canada is lowered 0.6 million tons in line with the latest crop estimates from Statistics Canada. EU-27 production is reduced 0.4 million tons mostly reflecting a reduction for France.
Global imports for 2007/08 are projected 0.8 million tons higher with increases of 0.2 million tons each for Bangladesh and Egypt. A number of lesser increases in small import market countries account for the rest of the projected rise in world imports. Global exports are lowered 1.0 million tons tightening the gap between projected marketing year exports and imports as world supplies tighten with lower production in major exporting countries. Exports are projected 0.5 million tons lower for both Argentina and EU-27 based on reduced production. Australia exports are lowered 1.0 million tons. Tight domestic supplies and competition from U.S. and other Northern Hemisphere 2008/09 new-crop wheat are expected to limit export opportunities for Australia during the July-September period of 2008 before the start of Australia’s next marketing year. Global ending stocks for 2007/08 are projected 0.3 million tons higher. A 0.9-million-ton increase in stocks for Australia is offset by a similarly sized reduction for the United States.
US corn ending stocks for 2007/08 are projected 100 million bushels lower this month. The corn export forecast is raised 100 million bushels on expected increases in foreign consumption and imports. At the projected 2.45 billion bushels, 2007/08 corn exports would be a record, surpassing the previous record of 2.4 billion in 1979/80.
USDA's World Agricultural Supply and Demand Estimates
Asia high food demand growth to continue
The executive director of the Australian Farm Institute, Mick Keogh, says that higher food prices driven by Asia's growing wealth and demand for meat and dairy meant the agriculture boom would be similar to the resources boom.
"While world agricultural markets have been dominated by excess supply over the past half-century, a new era has now begun in which global demand looks likely to grow faster than supply," he says.
A report produced by the institute and the Rural Industries Research and Development Corporation and published in early December, examined the demand for meat and dairy in 12 Asian countries - representing more than half the world's population - to 2020.
It found beef consumption will increase by 50%, pork 30%, chicken meat 40% and dairy 55%.
Australia is the biggest beef and dairy exporters in the world and the forecast extra import requirements of the 12 Asian countries by 2020 is equivalent to 50% of the present dairy production and 85% of beef production.
Since 1990, the report says per capita consumption of animal protein calories in China had doubled, and that trend would continue.
It requires about two kilograms of feed to produce one kilogram of chicken (live weight), and the ratio is 4:1 for pork and 7:1 for beef.
It is estimated that the additional demand for feed grain by 2020 will be 350 to 450 million tonnes - a 20 to 30% increase on present global production.
"The strongest demand increases will be for maize, sorghum and oilseeds such as soybeans, which have not traditionally been major crops in Australia and are more suited to being produced in subtropical and tropical areas," the report says.
