China’s growth in corn and soybean crush production and meat consumption is making commodities distribution more difficult, Rabobank International said.
China produced its biggest corn crop last year, mainly in the country’s northeast, and faced bottlenecks in trying to distribute it, Daron Hoffman, Rabobank’s Shanghai-based director of research, said in a report e-mailed today.
“After several years’ worth of increased corn production in the northeast, increases have far outpaced regional consumption growth, and on an annual basis, there are over 40 million tons of corn that need to be stored or exported from this region southwards,” Hoffman said.
“The profitability of corn relative to soybeans has driven down local soybean production and, coupled with the competitiveness of year-round soybean products trucked in from coastal ports, this has struck a severe blow to the local soybean crush,” he said.
Geographical mismatches between supply and demand mean grain traders and crushers will need to focus on distribution and storage investment, while feed millers and animal producers need to deal with the supply chain and risk of bottlenecks, according to the report.
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