by Linda H. Smith, DTN Markets Editor
ST. LOUIS (DTN) — Feeding a continually growing world population was the topic as about 700 people from a dozen or more countries convened at the Hyatt St. Louis Gateway Arch for the sixth Soy and Grain Trade Summit, arranged by Soyatech.
The proximity to the nation’s tallest manmade monument was fitting: Discussions brought home the monumental nature of the hurdle of feeding the world’s burgeoning population. The event’s timing was fitting as well, the day after reports of the birth, somewhere, of the planet’s 7 billionth soul.
The topic of feeding the world isn’t new; and it’s been even more in the forefront since commodity prices rallied in 2007. But statistics presented in St. Louis refocused concerns:
- World population grew from 6 billion to 7 billion in just 12 years.
- Another 2.2 billion people will be born between now and 2050 — equal to two more Chinas.
- Population is growing by 79 million a year.
- There are 200,000 births every day.
Presentations reviewed challenges including the economic growth and changing diets in developing countries, limited potential for additional crop acreage, and likely water shortages. Most speakers offered two key needs to meet those challenges: A strong thrust for ag research that boosts yields and efficiency, and free trade. We must produce double the amount of food with little addition of land, and increasingly less water use as it is diverted to cities for human use, speakers agreed.
“Agriculture has been off the world growth agenda since the grain surplus and low-price period in the 1980s,” said Robert Thompson, senior fellow at the Chicago Council on Global Affairs. “Right now, we are under-investing in research. I’m very concerned about the possibility that federal budget issues will reduce support for ag research, and commodity associations are too focused on maintaining commodity programs.”
Trade will need to grow because the location of population growth is mismatched with land availability and productivity, Thompson said. India and China, for example, have low land availability and low potential to boost yields, he said.
Citing the expected $137 billion in ag exports this year, “the U.S. is well on its way to reaching President Obama’s target of doubling exports by 2014,” said Sharon Bomer Lauritsen, assistant U.S. trade representative for agricultural affairs and commodity policy. October delivered the free trade agreements with South Korea, Colombia and Panama, and she noted that Mexico lifted its retaliatory tariffs. The administration is now emphasizing the Trans-Pacific Partnership, aimed to help the U.S. compete in the Pacific Rim. Other partners in that effort are Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam.
Short-Term Prospects
Looking at current supply and demand for oilseeds, Thomas Mielke, director of Oil World, said world consumption of oils and fats doubled in the past few years — increasing 59 million metric tons in 10 years. “We needed higher prices to ration consumption by approximately 1.2 to 1.5 mmt in 2010-11,” he said. “Biofuels use only 23 to 24 mmt a year — about 13{fe867fa2be02a5a45e8bbb747b653fe2e9d0331fd056b85cd0c1a3542435a96e} to 14{fe867fa2be02a5a45e8bbb747b653fe2e9d0331fd056b85cd0c1a3542435a96e} of total consumption — but they are what pushed stocks into a tight situation and prices higher. They had a major impact on the amount of soybean oil available on the world market. Exports are declining.”
In 2012, the world is probably facing a shortage of oilseeds as soybean and rapeseed stocks are declining, he added. “Global area will likely increase 2.4 million hectares (5.9 million acres) — slower growth than last year — due to competing grain. U.S. corn cannot give away any acres to soybeans because its balance is still tight,” he said. “Global oilseed production will be flat while consumption rises.” At the same time, palm oil production is expected to slow.
Oilseeds generally have 40-to-45-month cycles, he added. It is possible Oct. 4 marked the harvest lows, though additional price strength may be limited over the next few weeks. “In October, the current cycle was in place 34 months. We are probably near the cycle end and prices could start rising in 2012.” He projects palm oil trading between $850 and $1,500 a ton and soybeans higher by $70 to $100 a ton.
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Posted with DTN Permission by Haylie Shipp
