China's feed industry creates higher demand for soybeans

by World Grain Staff
Share This:
Search for similar articles by keyword: [Soybean], [Corn], [China], [USDA report]
WASHINGTON, D.C., U.S. —China’s soybean imports are forecast to hit a record of 86 million tonnes for market year 2016-17, up from the estimated 83 million tonnes in market year 2015-16, the U.S. Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS) said in a June 30 report. The increase is due to anticipation of higher demand for industry feed and protein meal as a result of a recovery in swine production and steady growth in the poultry sector. The USDA report forecast soybean imports for market year 2016-17 slightly lower than the official USDA data forecast of 87 million tonnes. 

Due to the recent change in the Chinese government’s corn policy, domestic soybean production is forecast to recover in market year 2016-17. The changes lower expectations for corn profits. Market year 2016-17 soybean acreage is up moderately with a forecast production of 12.5 million tonnes, up from the 11.6 million tonnes in the previous year. However, growth in soybean production is unlikely to increase the total domestic oilseed supply given the low forecast for rapeseed and cottonseed production.

The latest information from major soybean-producing provinces continues to support a moderate recovery in soybean acreage for market year 2016-17. The Heilongjiang province’s soybean industry leader estimated market year 2016-17 corn acreage in the province is down by 1 million hectares, part of which is substituted with soybeans. Similarly, Henan province’s official planting intention survey showed an 8.6% fall in the corn area for market year 2016-17 (or about 280,000 hectares) and a significant increase in planted soybeans. However, the province’s yearly soybean production remained small at about 500,000 tonnes in recent years. 

Since market year 2014-15, China’s declining production of rapeseed meal and cottonseed meal continues to boost the use of substitutes, primarily soybean meal. In market year 2015-16 and 2016-17, the widely perceived overestimation of rapeseed production data, and the forecast decline in cotton seed production will continue to support a growing consumption of soybean meal.

In anticipation of tight global soybean product supplies and a rebound in global prices as a result of dry weather in Brazil and flooding in Argentina, China’s feed mills and animal farms increased their stocks in June. As a result, the soybean meal price is up by about 40% which may impact additional soybean meal inclusion in feed processing in the coming months. In recent years, as soybean prices remained low, China’s feed industry maximized its soybean meal inclusion rate in feed production. 
 
Partners