Trade may easily exceed $1 trillion by 2020, from an estimated $700 billion in 2011, Michael Dwyer, director of global policy analysis division at the US Department of Agriculture, said in Melbourne today. Middle-class households outside the US may double to about 1 billion, led by growth in China, he said.Rising incomes in emerging markets including China and India have boosted demand for proteins, helping push global food costs tracked by the United Nations higher in June for the 10th time in the past year, staying near a record reached in February.
Chinas middle class will jump to about 325 million households in 2020 from about 100 million in 2009, Dwyer said.
You have a tailor-made recipe for higher commodity prices, he said. At the end of the day, supply and demand have to balance and the rationing device to that balance is prices.
Wheat prices have gained 13% this month as the US cut its estimate for domestic inventories next year. Corn prices have surged 81% in the past year and soybeans have climbed 44%. US agriculture exports may reach about $137 billion in 2011 from $115 billion last year, according to Dwyer.
Surging prices are likely to attract investment to agriculture and boost plantings, while countries may look to acquire foreign farmland to secure food supply, according to Dwyer. China may look to buy agricultural assets in Africa to ensure supply, he said. China may seek to boost its annual corn imports from the US to 15 million tons over the next few years as demand for food grows, Dwyer said. It will definitely have a profound effect on the global corn market, he said.