China’s soybean imports will set a record high for a 14th consecutive season, backed by ever-growing demand for protein and vegetable oils – although South American exporters, rather than the US, will pick up the extra demand.
US Department of Agriculture staff in Beijing, in their first forecasts for 2017-18, pegged Chinese soybean imports, by far the world’s biggest, at 89m tonnes, up 3m tonnes year on year on its estimates.
That would extend a spell of unbroken annual increases in Chinese purchases going back to 2004-05, when imports came in at 25.8m tonnes.
However, China’s purchases of soybeans from the US will hold steady at 30.0m tonnes next season, the bureau said, flagging “fierce competition from South American suppliers”.
Brazil’s shipments to China have been underpinned by a weakened currency, while “lower export taxes” are spurring shipments from Argentina, the bureau said in a report.
The data tally with a forecast from the USDA last month that US soybean export growth overall would slow in 2017-18, prohibiting a drop in the country’s inventories despite a forecast fall in production.
Soybeans vs corn
China’s increasing need for imports comes despite growing popularity of the oilseed among the country’s own farmers, following cuts to subsidies for planting corn, a major competitor to soybeans in the country’s spring sowings programme.
After years of offering farmers poorer returns than corn, “soybean earnings are estimated to be the same or even higher than corn” in China’s four key north eastern producing provinces, including Heilongjiang and Inner Mongolia.
“The local Hailun City government in Heilongjiang province estimated soybean profits are 7.5% higher than corn” for this season.
In a further nine provinces where the oilseed is grown, accounting for nearly half domestic output, but where government support schemes are less generous, proximity to major demand centres, and high-value use as food, is also supporting returns.
In Anhui province, for instance, the local official survey showed an increase in planting intentions in 2017-18″ a rise “mainly due to soybean’s comparative advantage in terms of lower inputs over competing crops”.
‘Struggle to boost yields’
However, prospects for production growth are being undermined nonetheless by poor yields, which have averaged 1.79 tonnes per hectare in China over the past four years – 39% below the US record over the same period.
“Soybean farmers also continue to struggle to boost yields and productivity which have remained constant for several years,” the bureau said.
Besides their lack of access to cutting edge seeds, Chinese soybean farmers quest to raise yields faces “major impediments” including the small scale of farmers and “inadequate” use of practices such as crop rotation.
Meanwhile, Chinese demand for the oilseeds “driven by an increasing domestic demand for meats, eggs, milk, seafood and vegetable oils”, with soybeans being crushed into feed ingredient soymeal, as well as soyoil.
The consolidation of China’s meat industry, into larger, more professional business from backyard operators less likely to buy in feed, is also spurring demand growth.
China’s rapeseed imports will also increase in 2017-18, by 200,000 tonnes to 4.1m tonnes on the bureau’s estimates, although remaining below the record high of 5.04m tonnes reached in 2013-14.
Imports will be helped by China’s agreement last year to shelve restrictions on imports from top exporter Canada, after threats of curbs over levels of foreign matter in shipments.
China’s own rapeseed output was forecast dropping 400,000 tonnes to a seven-year low of 13.1m tonnes next season, reflecting the end of a scheme in which the government set a floor price for the oilseed.