About CHS
CHS is a global agribusiness owned by farmers, ranchers and cooperatives across the United States. Diversified in energy, agronomy, grains and foods, we’re committed to creating connections to empower agriculture, helping our owners and customers grow their businesses.
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CHS offers a breadth of products and services to support our owners and customers every step of the way. Our practical solutions, local expertise and global connections give our farmer-owners and local cooperatives competitive advantages to reach their goals.
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CHS is committed to making a meaningful impact in agriculture and rural America. Through our stewardship initiatives, we invest in programs that develop new generations of ag leaders, promote ag safety and strengthen hometown communities.
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Cooperative value
Cooperatives are owned and governed by members who use its products, supplies, or services and operate in many sectors of the economy. In a cooperative system, people come together to scale buying power, gain access to goods and services and create economic opportunity.
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At CHS, our teams work together to provide the products, services and expertise farmers and cooperatives need to feed a growing population. As a CHS employee, you help empower agriculture by creating connections that bring shared success.
Winds of change in China
China has had a long-standing policy to be self-sufficient in key food source production, including rice, wheat and corn. In 2004, the Chinese government made historic adjustments to its agriculture policy when it eliminated taxes on agriculture and created anew system of subsidies for key commodities. The subsidies supported seed and machinery purchases and resulted in improved infrastructure.
This set the stage for a huge buildup of acreage devoted to corn production.
This information is provided by a research analyst of CHS Hedging, LLC, and should not be constructed as a recommendation to buy or sell any commodity contract.
Because soybeans were not considered a key food source, China’s leaders decided to rely on imports to meet the country’s needs. China has roughly 50 percent of the world’s hog supply, and pork is a staple in Chinese diets. In the late ’90s, animal nutritionists in China began to recommend adding soybean meal to hog rations to boost efficiency. Soybean meal became a core feed input for China’s hogs and soybean imports to China skyrocketed.
This information is provided by a research analyst of CHS Hedging, LLC, and should not be constructed as a recommendation to buy or sell any commodity contract.
China has continued its policy of encouraging corn production while needing to import more and more soybeans. Within the past few years, Chinese officials realized the country’s corn stocks were enormous, while it was importing soybeans at a record pace. They began to take measures to encourage farmers to reduce corn acreage and increase soybean plantings.
The changes are taking hold. Acreage is trending lower and data from inside China shows the massive stockpiles are shrinking. We have also seen a dramatic increase in the harvested area for soybeans the past few years. If the pattern continues, we could see a shift in Chinese imports. Soybean exports from the U.S. may not continue growing at the rapid pace we have seen in the past. We could also see China become a corn importer again. While this may not happen in the next year, the stage is being set for long-term structural change.
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Joe Lardy is the research manager at CHS Hedging. Get market news on Twitter by following @hedgeit.
Check out the full C Magazine with this article and more.