Chinese Whispers - Let Them Eat Meat

What's going on in China? They aren't exactly famed for playing with what we English would call a "straight bat" old boy, are they?

Certainly, despite record soybean production in South America, they keep coming knocking back on America's door - buying well over half a million tonnes of US soybeans already this week.

It can't all be down to what will probably turn out to be a relatively short-term spat over soyoil with Argentina can it? They've already got more than double the quantity bought for new crop than they did at this time twelve months ago too.

Reports continue to circulate that all is not well in China, with drought and high temperatures threatening crop production in the South West and the late arrival of spring in the North delaying wheat, corn and soybean planting.

Winter wheat production in the North is also under scrutiny. Below-average temperatures in October/November pushed the wheat crop in Northern China into premature hibernation - around 15 days earlier than usual - giving plants less time to develop.

The late arrival of spring has also delayed the crop’s greening phase by around 10-14 days, according to reports.

Official estimates still say that this season's wheat crop will be similar to last season's 114.5 MMT. Various sources, including the USDA's own attache in China, suggest that last season's crop was in reality more like 106-107 MMT.

Private analysts say that production this season will be lower again.

Likewise with corn, whilst official Chinese estimates insist that production last season was 163 MMT, most others peg output at somewhere around 145-155 MMT.

These are significant differences here, especially if we were to multiply them up to take into consideration previous seasons when production was also overstated for political reasons. Stockpiles in China are almost certainly nowhere near as large as the government would like to make out.

China still has some way to go in terms of per capita consumption of meat, despite growth accelerating to that of the fastest in the world. The increase in Chinese consumption of pork between 1998 and 2009 was greater than the TOTAL US consumption of pork in 2009, according to Patrick Westhoff, the co-director of the Food and Agricultural Policy Research Institute (FAPRI).

More than half of the global pig population live in China, he says. Meanwhile the Chinese appetite for beef, chicken and dairy produce are all increasing at "phenomenal rates" he adds.

That's a lot of mouths to feed, to feed lots of other mouths. They can make it rain, but can they make the sun shine as well?