WASHINGTON, D.C., U.S. — China’s domestic oilseed production growth continues to be hampered by limited arable land and recent domestic policies favoring grain production, the U.S. Department of Agriculture’s (USDA) Foreign Agricultural Service said in a March report. In market year 2014-15 China continued dominating the global oilseeds market, retaining its status as the world's largest importer of soybeans. Specifically, Chinese total soybean imports hit another record at 78.35 million tonnes, absorbing 60% of total world exports, and 58% of total U.S. soybean exports.

China’s total planted area for all oilseed crops is forecast to drop 2% to 21.87 million hectares and total oilseed production is forecast to decrease by 2.1% to 52.7 million tonnes in market year 2016-17. The lower forecast reflects an expected decline in rapeseed and cottonseed production – a combined 1.5 million tonnes – as policy changes and lower market prices reduce earnings in these commodities. The forecast for soybean production is up slightly, primarily affected by changes in grain policies, while the forecast for peanut production remains stable, responding to high comparative profits.

In market year 2016-17, the total Chinese oilseed consumption forecast rose to 142.9 million tonnes driven by increasing domestic demand for meats, seafood and vegetable oils. Additionally, the expansion of the oilseed crushing sector, growth in the feed industry and advancements in concentrated livestock and aquatic farming are collectively spurring demand and the need for imports.

With limited domestic production, soybean and rapeseed imports remain robust with total oilseed imports forecast at 89.2 million tonnes for market year 2016-17. Soybean imports could reach 84.5 million tonnes, up from the estimated 82 million tonnes in market year 2015-16, in line with the USDA official March estimate.

China’s imports of U.S. soybeans reached 29.7 million tonnes in market year 2014-15, up 2.7 million tonnes over the previous year and accounted for 38% of China’s total soybean imports. Imports from the U.S. are expected to stay strong at about 30 million tonnes in market year 2016-17. However, U.S. soybeans still face fierce competition from South American suppliers.

In addition, forecasting China’s meal and oil use and total oilseed demand continues to be a challenge given the differing data on the domestic area and production for rapeseed and peanuts, soybean use as food and direct use as feed, the production number of different feed and all animal products, and the unknown volume of state reserve of soybeans and vegetable oils.