Tags: China | Food | Imports | Drought

GlobalPost: Chinese Food Imports Might Get Slammed by US Drought

By    |   Friday, 27 July 2012 07:44 AM EDT

China, the world’s biggest importer of U.S. agricultural products, is bracing for higher food prices caused by the drought ravaging the American heartland.

Last year, China imported $20 billion worth of soybeans, corn, cotton and hides from the United States, outpacing Canada for the first time, GlobalPost writes.

Soybeans in particular are vital to the Chinese food supply, as they are a critical feed crop for the country’s pig farmers, who produce more than half of the world’s pork. Pork consumption has surged as more Chinese regularly eat meat.

Editor's Note: This Wasn’t an Accident — Experts Testify on Financial Meltdown

Soybean futures for November delivery have risen to $16.92 a bushel, beating the previous all-time high of $16.37 per bushel set during the financial crisis of 2008.

China is also the world’s second biggest importer of U.S.-produced corn after Japan. It is expected to import 5 million tons of U.S. corn next year.

All this means the Chinese are likely to see higher prices at their local butchers, economists say.

One of the largest instant-noodle manufacturers is among food processors bracing for lower margins from the increased costs, Globalpost says.

Rising food prices will give the government less margin to boost the money supply and spur growth, a major policy concern as the economy has been slowing.

Still, some analysts are optimistic. Though a major importer of U.S. foods, China is nearly self-sufficient in staples such as rice and wheat. Beijing’s leaders have learned to minimize dependence on foreign suppliers from their history of shortages and famine, including the Great Leap Forward that killed about 20 million between 1958 and 1961, Globalpost says.

“China endeavors to be close to self-sufficient,” says professor Harold Corke, who studies food security at the University of Hong Kong. Rising global food prices will “squeeze out buyers from, for example, Africa, long before they impose serious problems in China.”

Also, inflation in China has been falling, thanks to the slowing economy and a weakening real-estate market. Pork prices are 12 percent lower than they were last year.

Still, with a critical transfer of power due to take place in the fall, China’s Communist leadership would rather not have to be worrying about political unrest fueled by potential spikes in food prices, Globalpost says.

Meanwhile, the Los Angeles Times writes that the U.S drought is intensifying.

The U.S. Drought Monitor’s latest map of the United States and Puerto Rico released Thursday shows that 53.4 percent of the land is in moderate drought or worse, up from 53 percent the prior week, the Times says.

The U.S. Department of Agriculture reported this week that 55 percent of the nation’s pasture and range land is in poor to very poor condition, breaking the prior week’s record. Agriculture Secretary Tom Vilsack designated 76 additional counties as drought disaster areas, bringing the total to 1,369 counties across 31 states, the Times says.

Editor's Note: This Wasn’t an Accident — Experts Testify on Financial Meltdown

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Friday, 27 July 2012 07:44 AM
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