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Grain Comment, 13 June

The economic slowdown in China is having an impact on demand for agricultural products. For many years, agricultural analysts were not able to keep up with year-on-year percentage increases in demand for wheat/corn and soybeans for China. This trend has now changed.

The economic slowdown has seen significant reduction in the growth of protein demand. For the past twenty years, demand has been driven by a mass exodus of labour from the rural countryside to the city. Higher income and the desire to ‘eat-out’ for every meal saw a surge in restaurant consumption. The reverse has been happening since COVID, as many labourers fled the lockdowns and returned to their home villages.

While overall demand is still huge, demand growth has slowed. Demand for imported grain and oilseeds is likely to slow over the next 12 months, unless we see confidence returning to the Chinese economy.

While this will impact Tasmanian prices in the longer term, short term the price will be driven by weather.

Will the El Nino conditions impact mainland production? Tasmanian prices remain unchanged for the week.


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