A report released last month from the US Department of Agriculture’s (USDA) Foreign Agricultural Service predicted China will import a record amount of soybeans in 2016/17 - 86m metric tons - for use in the Asian country's poultry and swine production.
The rate of such imports, though, is predicted to slow down based on improved domestic production and the ongoing sale of stored products in the food and vegetable oil market, they said. “However, forecast lower imports of DDGS as a result of China’s implementation of anti-dumping duty increase demand for soybean meal and thus support growth in soybean imports,” they added.
A buyers’ delegation from China signed contracts for 5.1m metric tons, worth about $2.1bn, on a visit to the US last month, reported the US Soybean Export Council (USSEC).
However, the amount signed at this point is less than in past years, said Xiaoping Zhang, China director with USSEC. “Compared to what they did in previous five years, this is the smallest in terms of the volume [and] no high level government delegation is visiting DC,” he told us.
South American exports
South American soy producers are a source of serious competition for their US counterparts in terms of the Chinese import space, he said. “Competition from South America has been there for many years, making US sales more seasonal and dominant for six months in a year from November to April,” he added.
“However, in Brazil and Argentina, harvest is one facet, another facet is logistics, and it will usually play a key role in moving the crop out of the country and [getting] crop loaded on vessels to export destinations,” said Zhang. “If harvest is within expectation and logistics are efficient, I would say US market share will be further squeezed, not just in China, but in other parts of the world also.”
Soybean production in China
Chinese domestic soybean production is expected to increase in MY 16/17 to about 13m metric tons, up from 11.6m metric tons, said the attachés. The larger crop is based on a growth in forecast planted area of 10.4% from the previous year.
“In fact, acreage growth exceeded 20% in Heihe, Qiqihar and the state owned farm areas in Heilongjiang Province,” they said. “The generally favorable soybean growing conditions nationwide support a higher yield forecast than the previous year.
"However, in mid-September, The China Agricultural Outlook Committee lowered its MY16/17 soybean production to 12.53m metric tons from its August data of 12.86m metric tons based on lower yield forecasts and less harvested area as a result of drought in western Heilongjiang and eastern Inner Mongolia and high temperatures and low rainfall in parts of mid and downstream of the Yangtze River region.”
Feed use in the swine industry has increased even as profit margins for swine farmers declined slightly earlier in the autumn, said the attachés. Poultry production was stable for August and September.
“In the second half of 2016, soybean meal use is expected to continue growing moderately,” they said. “CNGOIC [China National Grain and Oilseed Information Center] estimated that soybean meal use is up 8.3% to 58.5m metric tons in MY15/16 and forecast MY16/17 soybean meal use continues to grow to 61.5m metric tons, or up 5.1% over the previous year,” they added.
Growth in that picture is primarily driven by the swine industry.