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Chinese Demand
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JonSCKs
Posted 5/3/2008 08:47 (#370419 - in reply to #370230)
Subject: good stuff


We've never really known what China was up to because their data was always getting revised. For instance in 1996 we thought Chinese grain production/demand was coming apart at the seams as they came in and basically "cleaned us out." Then stopped... All the numbers at the time showed drastic downturns in supplies and imminent shortages were revised upward to... "downward trending but okay for now.." If I recall.

So I'm not sure where these guys got their info.. I don't doubt the trends though. Remember that in about 98/99 through about 02 we hit rock bottom... if you bought into the whole "the world is running out of grain" hype of 96.. (I remember it.) Then the California energy crisis blew up in 01 (couldn't keep the lights on..) and everyone got tired of waiting on China so we jumped over to pushing ethanol... especially as we realized what Brazil could someday do by burying us in Soybeans... Futures under $5.00

I favor ethanol as we are seeing it takes a while for production to catch up with supply.. meanwhile if we were ramping up for energy.. if suddenly we needed to divert back for food.. you already had an instant supply as you could suspend the ethanol diversion...?? Now in order to keep the ethanol going you would need alternatives there also... cellulosic and imports (Brazil).. assuming a demand shock... similar to 96 occured and you were right back to grain ethanol in a short period.

Those are impressive charts.. Will the growth continue or level off at some point? Even if they are 45% less meat consumption per capita than us that doesn't mean they eventually become fat like us..? It would seem that our livestock sector could use some support... exporting meat directly. South America can and will increase production (assuming Argentina gets things lined out someday...) so I don't think the US has to solve China's needs by itself... but it will be another challenge.

South America takes more time to bring land into production.. as much as three years in Brazil if I recall correctly..?? The US can come online quicker.. still have about 30 mln acres in reserve.. but not as productive soils.

It's a good thing we were already ramping up.

btw the energy chart and world crude oil predicament can basically parallel the grain scenerio outlined above.. Only worse, Chinese demand is in high growth... rest of the world is struggling to keep up with it.

Edited by JonSCKs 5/3/2008 08:55
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