Chinese soy imports to fall short of forecasts in 2014-15

(Agrimoney) – China’s soybean imports, one of the most important dynamics in world agriculture, will rise this season less quickly than had been thought, but are poised for stronger growth in 2015-16.

The US Department of Agriculture bureau in Beijing estimated that China would import 73.0m tonnes in 2014-15, a rise of 3.7% year on year, and 1.0m tonnes below the department’s official forecast.

The bureau, in explaining its relatively low forecast, flagged pressure on soybean processors’ margins.

“China’s soybean crushing sector experienced an unprecedented nine consecutive months of negative margins with a total loss estimated at 20bn remnibi ($3.25bn) in 2014,” the bureau said.

“This could lessen the crushing sector’s incentive to over import in 2014-15.”

Soymeal needs

Nonetheless, the bureau, in its first estimate for 2015-16, forecast a reacceleration in Chinese soybean imports, with the pace rising to 6.2%, taking the volume to 77.5m tonnes.

The forecast reflects an expectation of a rose of nearly 3m tonnes to 58.78m tonnes in domestic consumption of soymeal, the protein feed ingredient processed from soybeans, besides an increase in soyoil use too.

“Investment in animal production is increasingly popular leading larger-scale and more modern animal production operations to demand more industrialised feed,” the bureau said.

“Given its cost effectiveness and nutritional value, soymeal remains the best choice for feed production and increasingly concentrated animal production.”

China is by far the world’s biggest soybean buyer, responsible for more than 60% of world imports, making its volumes particularly important for pricing, and in turn for the incentive that US and South American farmers get to plant the oilseed in preference to corn or cotton.

Weaker harvest

The bureau forecast that China’s own soybean production will remain well short of meeting domestic needs, falling by 300,000 tonnes this year to a 23-year low of 11.7m tonnes.

“Soybean production growth continues to be restricted by factors including low profits, stagnating yields, lucrative alternatives and recently, subsidy reductions.

“Crop alternatives to soybeans are limited in some regions in Heilongjiang and Inner Mongolian provinces due to the short growing days.

“However, farmers with options have already switched from planting soy to grains.”

Rapeseed prospects

Chinese production of rapeseed will fall this year too, by 300,000 tonnes to 14.1m tonnes, the bureau said, citing uncertainty over subsidies and the appeal of other crops.

“An industry survey shows that rapeseed profits in 2014-15 were 1,800 remninbi per hectare. These are lower than wheat profits in Hubei and Hunan provinces.”

Chinese rapeseed imports will rise by 400,000 tonnes to 4.5m tonnes in 2015-16, the bureau said.