Developing Markets | Enabling Trade | Improving LivesDeveloping Markets | Enabling Trade | Improving Lives

US/China Grain Trade

Trends and Challenges

Rebecca Bratter, Director Trade Development

Agricultural Outlook ForumFebruary 24, 2011

Developing Markets | Enabling Trade | Improving Lives

Percent GDP Growth

2008 2009 2010 2011World 1.7 -1.9 3.9 3.5Latin America 4.2 -2.3 5.9 4.4USA 0.0 -2.6 2.8 2.9Canada 0.5 -2.5 3.0 3.2UK -0.1 -4.9 1.8 1.8Japan -1.2 -6.3 2.4 2.1China 9.6 9.1 10.5 9.8India 5.1 6.8 9.1 8.1

Developing Markets | Enabling Trade | Improving Lives

China: Growing Market Dynamics bring growing opportunities

• Population 1.3 billion• Rapid rise in incomes Changes in diets• Middle class to grow to 700 million, 75%

Urban • Per capita income: – TODAY $5,000– SOON $10,000 - $40,000

Developing Markets | Enabling Trade | Improving Lives

China in World Agriculture

• #1 producer of cotton, rice, pork, peanuts, numerous fresh fruits, milk

• #2 producer of corn• #1 importer of soybeans, cotton

Source: USDA/FAS PSD online

Developing Markets | Enabling Trade | Improving Lives

China -Transition and Uncertainty

• Food security concerns• Lack of supply/demand information• Shift from self-sufficiency policy, net exporter

to net importer• Declining corn stocks• Food price inflation

Developing Markets | Enabling Trade | Improving Lives

China Corn Consumption v. Production

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010-20,000

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

Total Use minus Production

Production

Total Use

Thou

sand

s met

ric to

ns

Developing Markets | Enabling Trade | Improving Lives

China Import Trends

CHINA CORN & DDGS

USGC in the market since 1982

Exported 2.4 MMT DDGS to China

First significant purchases of corn since 1995 DDGS Corn

0

500000

1000000

1500000

2000000

2500000

3000000

600000

0

2400000

1400000

Exports 2009-2010

20092010

MMT

Developing Markets | Enabling Trade | Improving Lives

China Corn Import Outlook

1990/91

1992/93

1994/95

1996/97

1998/99

2000/01

2002/03

2004/05

2006/07

2008/09

2010/11

2012/13

2014/15

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

th.m

t. We are Here

?

Developing Markets | Enabling Trade | Improving Lives

China DDGS Imports (Jan-Dec)

2008 2009 20100

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

6,761

655,165

3,164,204

Met

ric to

ns

Developing Markets | Enabling Trade | Improving Lives

China Corn Stocks to UsePrivate estimates

19921993

19941995

19961997

19981999

20002001

20022003

20042005

20062007

20082009

20100%

10%

20%

30%

40%

50%

60%

70%

80%

Developing Markets | Enabling Trade | Improving Lives

Commercial Hogs Consume Grains

20042005

20062007

20082009

20102011

20122013

20142015

0%10%20%30%40%50%60%70%80%90%

Percent of Hogs in Commercial Production Facilities

35%

65%

Developing Markets | Enabling Trade | Improving Lives

Developing Markets | Enabling Trade | Improving Lives

Developing Markets | Enabling Trade | Improving Lives

Growth of dairy feed is faster than swine, poultry and beef cattle

Dairy Feed Total Feed0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

13.97%

2.18%

Growth Rate

Developing Markets | Enabling Trade | Improving Lives

U.S. Corn Yield Projections

11.61

13.0614.19

13.12

16.63

18.14

0

2

4

6

8

10

12

14

16

18

20

1970

/1971

1973/1

974

1976/1

977

1979/1

980

1982

/1983

1985/1

986

1988/1

989

1991/1

992

1994

/1995

1997/1

998

2000/2

001

2003/2

004

2006/2

007

2009

/2010

2012/1

3

2015/1

6

2018/1

9

2021/2

2

2024/2

5

2027/2

8

2030/3

1

mt/h

a

ActualTrend 1Trend 2Trend 3

Developing Markets | Enabling Trade | Improving Lives

U.S. Ethanol Production

0

2000

4000

6000

8000

10000

12000

14000

16000

2003

/4

2004

/5

2005

/6

2006

/7

2007

/8

2008

/9

2009

/10

2010

/11

2011

/12

2012

/13

2013

/14

2014

/15

2015

/16

mill

ion

gallo

ns

GrowthProduction

Developing Markets | Enabling Trade | Improving Lives

U.S. corn producers’ commitment

• Increase quality and timeliness of market information

• Increase production to meet export needs• We never close. Exports available every day.• Continue to innovate, adapt technology.• Sustain infrastructure to meet world demands.

Developing Markets | Enabling Trade | Improving Lives

USDA Import Projections

2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/210

20

40

60

80

100

120

140

China

Other

Western Hemisphere

SEA

Asia

Middle East

North Africa

Europe

mill

ion

met

ric to

ns

113 mmt = 4.45 bbu

Developing Markets | Enabling Trade | Improving Lives

China Possible

2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/210

20

40

60

80

100

120

140

ChinaOtherWestern HemisphereSEAAsiaMiddle EastNorth AfricaEurope

mill

ion

met

ric to

ns

125 mmt = 4.92 bbu

Developing Markets | Enabling Trade | Improving Lives

US Corn Outlook

2009/10

2010/11

2011/12

2012/13

2013/14

2014/15

2015/16

2016/17

2017/18

2018/19

2019/20

2020/21

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

ProductionExportsFeed/ResidualFSIDomestic useEnding Stocksm

illio

n bu

shel

s

Developing Markets | Enabling Trade | Improving Lives

Corn outlook plus China

2009/10

2010/11

2011/12

2012/13

2013/14

2014/15

2015/16

2016/17

2017/18

2018/19

2019/20

2020/21

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

ProductionExportsFeed/ResidualFSIDomestic useEnding Stocksm

illio

n bu

shel

s

Developing Markets | Enabling Trade | Improving Lives

Concluding Thoughts

• How much will corn will China import• How much will China’s corn demand impact

US stock to end/use ratio• Impact on corn prices• What about DDGs • Is the US prepared for the impending wave of

demand• How will China manage transition to net

importer?

Developing Markets | Enabling Trade | Improving LivesDeveloping Markets | Enabling Trade | Improving Lives

Thank You