China’s Hunger for Soy Could Drain World Supply

October 14, 2014

Based on rising population rates and increased wealth, at its current rate of production China’s meat production industry will need more soybeans than are produced in the world’s top exporting countries according to LMC International.  Investors may be able to take a bullish stand on soymeal in the long term as oilseed meals begin to drive prices for the sector as China’s demand outpaces global supply.  By 2024 China is forecast to need 180 million tons of soybeans per year, exceeding the exportable supplies of the U.S., Brazil, and Argentina combined.  In recent years it has been vegetable oils that have driven the market – booming because of demand for biodiesel production, through tax credits and blending mandates.  Currently 15% of global vegetable oil production is used to make fuel, and at its peak in 2010, one third of global rapeseed output was used to make biodiesel.  However as the U.S. and EU cut blending rates and shift toward using more domestically-sourced natural gas vegetable oil prices along with crude oil prices are coming under pressure.

 

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