China's soybean imports will hit a record in 2013-14, supported
by drop in domestic production to a 21-year low, but will fall short of forecasts
laid out in long-term projections.
The US Department of Agriculture's Beijing bureau estimated
Chinese soybean imports at 65.5m tonnes next season, equivalent to 1.25m tonnes
a week, and up 2.5m tonnes on this season's total.
The pace of purchases by the world's largest soybean buyer, which
accounts for about two-thirds of world imports, will be supported in part by a
decline in domestic production.
The bureau forecast China's domestic harvest falling by
500,000 tonnes to 12.0m tonnes - the weakest since 1992-93.
Switch to grains
The harvest forecast reflects the greater profits available
from alternative crops, with corn returns estimated by Chinese officials at
6,000 remninbi ($923) per hectare in Heilongjiang Province this season, 44%
more than obtained from soybeans.
"Higher profits have already influenced farmers with the option
to switch to more profitable grain crops," the bureau said.
And elevated domestic demand was unlikely to see farmers
switch back to the oilseed, "given soybeans' modest profit signals, lucrative
alternative crops and land constraints".
Even for those growers which were sticking with soybeans, "small-scale
farm size, lack of agronomic techniques, such as soybean crop rotation, and
limited access to better inputs remain major impediments to yield increases".
'Strong demand from crushers'
Meanwhile, Chinese demand for soybeans continues to rise,
supported by growing feed consumption, which is estimated to have risen by some
7% to 193m tonnes last year.
"Continuing soybean import growth is driven by strong demand
from the crush industry to supplement domestic production," the bureau said.
Domestic soybean crushing capacity is estimated to have
risen by 10m tonnes to 125m tonnes during 2012, although the industry is seen operating
well below full throttle.
However, the import figure is less than the 67.6m tonnes
forecast by the USDA last month in its so-called "baseline" report, giving
long-term projections for crop dynamics, and which forecast Chinese purchases
topping 100m tonnes within the decade.
"China's modern, efficient, but underutilised oilseed
crushing capacity is expected to drive strong gains in soybean imports," the
baseline report said.
US vs Brazil
The bureau also forecast Chinese imports of US soybeans
remaining below a high of 25.0m tonnes reached in 2010-11, as Brazil increases
its leadership on supplies to the market.
Chinese purchases from the US in 2013-14 are estimated at 22.0m
China is seen as being badly caught out by the hiccups in
Brazil's logistics which are leaving ships waiting a reported 60 days to load
up, forcing buyers to return to the US, and higher prices.
While this week has not seen any announcements of Chinese
purchases of US soybeans, "some are pontificating that China has not switched
any cargoes of late because there is no freight available as all is sitting
idle waiting to load down south", Kim Rugel at broker Benson Quinn Commodities