China needs to outstrip the Iowa soybean crop

All the soybeans in Iowa won’t be enough to meet the anticipated surge in China’s imports over the next four years as the nation feeds a record pig herd and drives bean prices to an all-time high.

China, which doubled meat consumption in the past two decades, may boost international soybean purchases 33 percent to 66.9 million metric tons by 2014, a 16.6 million-ton increase that is more than Iowa, the largest U.S. grower, produced last year, government data show. U.S. farmers are cutting back on planting, meaning prices will rise 21 percent to $16.80 a bushel by Dec. 31, a Bloomberg survey of 20 analysts shows.

Almost half the world’s pork comes from China, which has 689 million pigs and will be responsible for all of this year’s increase in global supply, the U.S. Department of Agriculture estimates. That’s adding to China’s dependence on raw-material imports, making it vulnerable to inflation that Premier Wen Jiabao has pledged to combat without derailing economic growth.

“China is building a livestock and meat industry in five years that took the United States 50 years,” said Michael Swanson, the senior agricultural economist in Minneapolis for Wells Fargo. “U.S. farm trade with China may double in the next five years.”

The 13-fold expansion in China’s economy in the last two decades has meant an almost doubling in meat consumption by the country’s 1.34 billion people, World Bank and government data show. While the U.S. trade gap with China widened by about 13 percent to $23.3 billion in January, exports of U.S. farm goods are the highest ever.

China may increase soybean imports to 68 million tons by 2014, a 17.7 million-ton increase from last year that would exceed the purchases forecast by the USDA, according to Grant Kimberley, director of market promotion for the Iowa Soybean Association.

It takes about 2.8 pounds of feed to produce 1 pound of pork, according to the American Soybean Association.

(Source: http://www.journalgazette.net/article/20110417/BIZ/304179950/-1/BIZ09)