Don’t be fooled by the softer pace of Chinese soybean imports last month.
China’s soybean imports will spring, rather than crawl, to a fresh record in 2017-18.
At least, according to state-backed crop trader Cofco, which has pegged them at 100m tonnes, hitting nine figures for the first time, and ahead of forecasts of 95.97m tonnes from China’s farm ministry, and 97.0m tones from the US Department of Agriculture.
The forecast, from Yanchuan Li, deputy general manager of the oilseeds processing division at Cofco, reflected ideas of a “high rate of growth” in Chinese soymeal demand.
High indeed. The USDA, in a briefing overnight, said that its forecast, which puts soybean imports up 3.5m tonnes year on year, factors in a rate of demand growth for soymeal, one of the main bean-processing products, of 8%.
So how likely is the Cofco forecast to be realised?
Comments by Si Yao, head of trading in China at ADM (Shanghai) Management, signal one reason for caution, saying that a crackdown on imports of unapproved genetically modified soybeans may curb Chinese crushing, and so boost soymeal values.
"Some plants did not get GMO certificates, and that will support [soymeal] prices in the short term," he said.
Another came with farm ministry data, also on Wednesday, showing the decline in the country’s pig herd accelerating last month, to an annual pace of 6.6%, up from 6.1% in September, and the fastest in nearly two years.
The decline, fuelled by an environmental crackdown, means less swine mouths to feed at least.
Still, cynics may see in China’s announcement last week to ditch VAT on imports of US distillers’ grains, or DDGs, a reason to take seriously the Cofco forecasts after all.
DDGs are a major alternative to soymeal as a protein ingredient in feed.
If officials are worried about China getting hold of enough soybeans this season, lowering trade barriers on DDGs imports would be an entirely sensible way of underpinning feed supplies.