From Terrain — Population or Prosperity?

On January 1, 2000, the price of corn in the U.S. stood at $2.01/bu., soybeans were at $4.56/bu., and oil sat at $27.21 per barrel. By the summer of 2008, those prices had pushed to $7.20/bu., $16.05/bu., and $140 per barrel, respectively. The dramatic rise in global demand had fundamentally changed the price level in commodity markets. While biofuels production was seen as the primary contributor to price increases, Chinese demand growth easily doubled the impact of American biofuels. In the years since, Chinese demand for vegetable protein, primarily in the form of soybean and soymeal imports, and animal protein in the form of pork, have continued to drive agricultural markets.

In early 2023, China’s statistics agency announced that deaths in their country exceeded births in 2022. Many commentators questioned whether this heralded the end of an era of high growth and high profits for U.S. agriculture.  After all, if the largest country in the world has a declining population, what might that mean for the agricultural economy? These concerns overlook the critical role that eating better plays as consumers become wealthier.

The end of China’s population growth will have little impact on their demand for additional animal and vegetable protein as their population has already been growing very slowly for two decades, while their income has been growing very quickly.