{"id":35287,"date":"2013-01-14T00:52:27","date_gmt":"2013-01-14T05:52:27","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=35287"},"modified":"2013-01-14T07:09:55","modified_gmt":"2013-01-14T12:09:55","slug":"investing-in-2013-dont-ignore-the-surging-agricultural-demand-in-china","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2013\/01\/14\/investing-in-2013-dont-ignore-the-surging-agricultural-demand-in-china\/","title":{"rendered":"Investing in 2013: Don\u2019t Ignore the Surging Agricultural Demand in China"},"content":{"rendered":"

By MoneyMorning.com.au<\/u><\/a> <\/p>\n

When looking for hot spots for investing in 2013<\/u>, investors must consider the major trade shift happening in China for agriculture<\/strong>.<\/p>\n

You see, China is the world’s largest consumer of grains. That’s not surprising considering China’s population is 1.3 billion, with an additional 8 million children born each year.<\/p>\n

China historically has been largely self-sufficient in most grain categories, rarely importing products like corn and wheat.<\/p>\n

But that is changing<\/p>\n

China is becoming a net importer<\/em> of grains.<\/p>\n

As Rabobank (one of the largest lenders in global agribusiness) analyst Erin FitzPatrick told AgriMoney<\/em><\/strong>, “This is something that the market should be looking at.”<\/p>\n

Here’s why.<\/p>\n

Global Effects of Chinese Grain Imports<\/u><\/p>\n

As China imports more agricultural products<\/a>, global demand for commodities<\/a> like wheat, rice, barley and corn will rise – and so will their prices.<\/p>\n

A good example of this shift in China is wheat.<\/p>\n

China had not been a major wheat importer since the 2004-05 crop year. But in the 2012-13 crop year, China is expected to import over 3.6 million tons of the grain.<\/p>\n

In fact, the country’s overall grain imports tripled in the year through November from just a year earlier. Imports rose from just 4.5 million metric tons to a whopping 13.4 million metric tons.<\/p>\n

Corn and soybean imports in China also are growing as more and more of the country’s consumers can afford to buy meat.<\/p>\n

China’s meat consumption grew 9.2% per year over the past decade. That translates into the need for more animal feed, which in turn means the need for more soybeans and to a certain extent corn.<\/p>\n

One of the world’s largest food trading companies, Louis Dreyfus Commodities, told the Financial Times<\/em><\/strong> that a surge in Chinese corn imports was a “game-changing move.”<\/p>\n

“For China to lose even a little bit of self-sufficiency means a lot on the trade front,” Jean-Yves Chow, another analyst at Rabobank, told the Financial Times<\/em><\/strong>. “Even if China imports 5 percent of their corn, that is equivalent to one third or one half of the corn trade in the world.”<\/p>\n

China is expected to import about 63 million metric tons of soybeans in 2013. To put that into perspective, Iowa grows only 13-15 million metric tons of soybeans per year.<\/p>\n

This is good news for American farmers.<\/p>\n

The U.S. Department of Agriculture says China will remain the largest importer of U.S. agricultural products in the 2013 fiscal year. It is expected to import in excess of $21 billion worth of U.S. agricultural goods.<\/p>\n

This is especially true in the light of poor wheat crops in Russia and the Ukraine, which will be unable to meet China’s increased grain demand.<\/p>\n

Investing in 2013: Cash In on China’s Food Demand<\/u><\/p>\n

This change is good news for investors who are aware of this shift now and buy into agricultural commodities before prices rise<\/a>.<\/p>\n

Prices for grains – corn, wheat and soybeans – can be tracked through the use of exchange-traded funds (ETFs).<\/p>\n

In fact, Teucrium has an ETF for corn, wheat and soybeans. In each case, the ETF holds futures contracts on the particular grain. Here is the list:<\/p>\n

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