With corn supplies dwindling, China faces quandary

on Friday, April 29, 2011

With corn supplies dwindling, China faces quandary  As the world's fastest-growing economy, China increasingly demands a wide variety of goods to satiate its huge population. According to a recently released report, China's demand for corn will outstrip supplies over the next decade, potentially leading to higher grain prices.

Shang Qiangmin, the director of the China National Grain & Oils Information Center (CNGOIC), told Grain News that rising livestock production in China, along with an increase in biochemical manufacturing, will combine to drive corn demand higher over the next 10 years. Shang told a grain conference that the industrial sector increasingly craves the commodity, asserting that demand over the past few years has "exceeded imagination."

According to Bloomberg, Shang was cited as saying that through September 30, corn used to produce starch and other biochemical products will soar to 50 million metric tons - up precipitously 5 million metric tons from the same period in the year prior.

However, soaring grain prices and limited supplies are effectively forcing China to curb demand. Last year, CNGOIC pegged Chinese output at 172.5 million metric tons and consumption at 172 million metric tons. Nonetheless, analysts contend the output is grossly overestimated, and that figures do not take into account soaring commodity values.
 

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