China's soybean imports will average nearly 1.4m tonnes a
week next season, boosted by growing demand from the livestock industry, at a
time when domestic production of the oilseed will fall to a 22-year low.
The US Department of Agriculture's Beijing bureau, in its
first forecast for Chinese oilseeds in 2014-15, pegged soybean imports at a
record 72.0m tonnes, up 4.0m tonnes year on year, on its estimates.
The figure is one of the most important in the oilseeds
industry, with the country, by far the biggest soybean consumer, responsible
for more than 60% of world imports.
And its appetite for buy-ins is being boosted not only by
the need for soymeal to feed its growing hog herd, and meet consumers'
increasing taste for meat, but by a downturn in domestic production, with
farmers finding better profits from other crops.
'Profit from soybeans
Indeed, this year's Chinese soybean harvest will fall by
200,000 tonnes to 12.0m tonnes, the lowest since 1992, thanks to "obstacles to
expansion, such as low profits, yield limitations, lucrative alternatives and
recently, subsidy reductions", the bureau said in a report.
China's National Development Research Council estimates growers'
returns from soybeans per hectare reaching only about 70% of those from corn,
while officials in Heilongjiang, a major corn and soybean producing province,
the oilseed is seen as offering only 56% of the returns of the grain.
"If farm labour was included as a cost, the net profit from
soybeans was negative," the report said.
A change to China's subsidy regime, being particularly
closely watched in cotton markets, offering growers in a trial area a direct
subsidy plus a "target price", is seen unlikely to stimulate more ouput.
"Many industry insiders believe that soybean planted area
won't increase as the target price is unlikely to be higher than the floor
purchase price," the current support mechanism, which has failed to prove high
enough itself to attract new area to the oilseed.
'More pork needed'
Meanwhile, demand is being spurred by the impact of China's growing
taste for meat, with consumer spending on animal proteins, including eggs and
fish, growing by 12% last year to $272 a head.
While feed demand by China's poultry industry has been dented
by a switch by consumers from chicken, amid the outbreak of H7N9 bird flu, "swine
and aquatic feed is expected to compensate, as more pork and aquatic products
will be needed to meet consumer's protein food demand in 2014".
Soymeal is expected to retain its place as the meal of
choice, given its higher protein value than rapemeal.
"With the large soybean crush industry using growing imports
of soybeans, domestic soymeal production is expected to continue to be high
with adequate supply to meet the market demand in 2014015 and beyond."
In fact, China's soybean crushing capacity has grown to 140m
tonnes, according to the official CNGOIC think tank, well ahead of the actual
83m tonnes that will be processed in 2014-15, according to the USDA bureau.
And 78% of this capacity is sited near the Chinese coast, to
ease the inflow of the country's huge soybean imports.
The USDA bureau nonetheless highlighted the potential threat
to soybean imports given by China's reluctance to embrace genetically modified
crops, a factor which has seen it reject a series of US corn cargoes since
China's approval system for GM crops "lags behind the
international commercialisation pace of new events, which adds uncertainty for