Asia and the Americas: The increasingly delicate balance between feed demand, feed supplies, unstable climate and biofuels

Eric J. Brooks, Senior Analyst, eFeedLink and editor, FeedBusiness Worldwide

Asia’s burgeoning meat demand is being balanced against North and South America’s limited arable land, flattening crop yields and biofuel production. The past ten years have seen a coincidence of these factors produce the most volatile, inflationary feed grain markets in living memory.

The first decade of this century saw soybeans kindle food price ’agflation’ but the next ten years will see corn become the primary driver of meat price inflation. In early 2010, major institutions created corn price forecasts that showed the average price of CBOT corn staying below US$5/bushel for the next five years. Corn then jumped over US$5/bushel in less than six months. This is because China’s demand for soy is now being joined by growing corn imports, both by China itself and increasingly, by Southeast Asia. When coupled with South America’s unstable crop growing weather, this carries profound implications for the price of feed and livestock production.

We also disprove the entire ‘climate change’ argument while making an important qualification – South America’s grain growing climate has always been unstable. We learn why Latin America’s unstable weather now plays a growing, but mostly invisible role in the price volatility of feed crops.