14/04/2010 (Bloomberg) - A revaluation of the yuan that’s too rapid could curb income growth and slow the expansion of food demand in the world’s most populous nation, according to a Rabobank Groep NV analyst.

“If they appreciate the Chinese yuan too quickly, they will be unable to continue to maintain the same wages growth that they have been enjoying,” Rabobank agricultural commodities analyst Wayne Gordon said at a conference today. “That may put a bit of a dampener on forecasts about protein consumption and about grain consumption,” he said.

A revaluation of the yuan may have minimal impact on agricultural commodities in the short-term, because prices are mainly being driven by the increasing supply of soybeans and rising grains stockpiles, Gordon said in Melbourne.

“Income growth in China has been largely based around the fact that they have been able to be very competitive in the market,” Gordon said. If the yuan appreciates too quickly, it will erode China’s ability to compete and raise wages, he said.

China is the world’s largest consumer of wheat, second- biggest user of corn and largest importer of soybeans, which are crushed for livestock feed and edible oil, according to U.S. Department of Agriculture data.

A stronger yuan may help boost exports of palm oil to China from Indonesia, the largest producer, by at least 21 percent this year, Fadhil Hasan, executive director at the Indonesia Palm Oil Association, said in an interview on April 8.

An increase in the currency would make palm oil, traded in dollars, cheaper for Chinese buyers, he said.

China has pegged the yuan at about 6.83 to the dollar since July 2008.