“However, China’s rising demand for oilseeds continues to far exceed the growth in domestic oilseed production,” the report said. “Chinese oilseed imports are expected to grow to another forecast record of 91.5 million tonnes in market year 2017-18, up 3 million tonnes compared to the previous year estimate.”
The report forecasts steady economic growth at about 6.7% in 2017, and the continuous modernization of China’s domestic feed and livestock sectors are boosting consumption of oilseed products. Adequate global supply of oilseeds encouraged Chinese importers to buy more soybeans with total soybeans imports estimated at 88.5 million tonnes in market year 2016-17, up by over 5 million tonnes compared to the previous year.
In addition, soybean meal use is partially up driven by a significant fall in DDGS (dried distillers grains) imports as a result of China’s high anti-dumping duty imposed on U.S. imports since January 2017. According to the report, despite increases to soybean acreage, significant increase in total oilseed acreage and production is unlikely given China’s limited arable land and continuously low productivity.
The report emphasized the importance to note that forecasting China’s meal and oil use, and total oilseed demand remains a challenge due to difficulties in collecting data mainly due to massive players in each part of the oilseed industry chain.
“Record imports are still driven by robust Chinese consumption of soybean products (meal and oil), which cannot be satisfied by the weak growth in domestic soybean production,” the report said. “Since late 2016, adequate global soybean supplies at favorable prices have encouraged Chinese buyers to add more imports.”
The preliminary estimate for soybean imports in the first three quarters of market year 2016-17 will reach 67.7 million tonnes, up 11.8%, or a net growth of over 7 million tonnes compared to the same period last year. The rapid increase of soybean imports resulted in high soybeans and soybean meal inventory in crushing plants during the second quarter of 2017, according to the USDA report. Some crushing plants were forced to suspend operation to ease soybean meal stockpiles. Since February 2017, soybean crushing margins turned negative and this trend is expected to continue in the last months of market year 2016-17.
In June, the Chinese media reported that the government reiterated a ban of imported soybeans for food use implying a lower probability for Chinese oilseed crushers to ease the pressure of their relatively high soybean stockpiles.