U.S. Farmers To Gain From Expanded World Food Demand

An undisputed claim of analysts and experts is that incomes will grow significantly in big countries like China and India for a while. As a result, there will be more demand for proteins and, consequently, for grains. For U.S. farmers, that means that exports will continue to be steady and will be a bullish factor for grain prices in the coming years.

MORE U.S. CORN, SOYBEAN CONSUMERS

Data released from the Food and Agriculture Organization of the United Nations revealed what the world and what each country specifically consumes of food on a per capita basis and the evolution of those numbers from 1961 to 2011. That historical evolution and the economic trends can give us some clues to guess what lies ahead for farmers and consumers all over the world.

In the case of China, each person used to consume nearly 57% in grains, 28% in produce, and just 2% in meat in 1961. As of 2011, each Chinese used to eat about 47% of grain, 15% in Produced and 17% in meat. This meant that humans ate less grains such as rice and wheat, but animals consumed more meal such as corn and soybean in that country; That was explained by a big income growth in China and resulted in a major demand for commodities in agricultural countries, such as U.S. and Brazil, over the last several years.

Despite the recent falls on those grain prices, China is expected to have a consumption increase of 21.1 pounds of meat per person until 2023, according to data sent by Brazilian market analyst Carlos Cogo. 

"The demand will continue to grow for poultry, hogs, beef, fish, and dairy products. Brazil is surging as number one supplier in the world of beef, sugar, soybeans, and corn," said Carlos Cogo.

David Hightower, market analyst and author of The Hightower Report, says that an important shift could come from a replacement of fishmeal as an input in China to soy meal. Fishmeal prices skyrocketed in the Asian country earlier this year and as recently as December 1st Chinese sources were reporting a significant shortage in fishmeal supplies, according to Hightower. 

"We might have a significant above ground supply of grain protein but the below surface situation might be the next big thing in grain market uncertainty. At times fishmeal is 7 to 8 times more expensive than soybean meal. If large production and or supply ahead sends soybean meal prices cascading lower fishmeal users might decide to use an input that is 10 times cheaper," Hightower predicted.