China 2017/18 Soybean Imports Soar06/13/2017
Global soybean consumption is forecast to grow 4 percent in 2017/18, driven mainly by China’s strong protein feed demand. This demand is projected to lift soybean imports to a record 93 million tons.
Despite recent variability in animal production, expanding hog populations, consolidation and modernization of the animal production sectors (primarily higher yields per hog and dairy cattle), as well as a growing aquaculture industry, are all driving total feed demand and production upward.
China remains the top global producer of pork and currently holds over half of the world’s supply, so without a doubt, rising pork production is the main driver of feed demand. However, China’s fish farming is also leading the world’s aquaculture growth and accounts for approximately 60 percent of globally farmed warm water species.
In 2006, China’s total artificially cultivated aquatic production was estimated at 31 million tons. Within the last 10 years, aquaculture has grown in importance, with production estimated at a little over 50 million tons in 2016. According to the China Ministry of Agriculture, total aquaculture feed production in 2015 was estimated at approximately 55 million tons.
Fish meal and roquette seed meal are the main protein sources in aqua feed; however, industry sources estimate that approximately 9.0 million tons of soybean meal is also used in fish farming.
In 2005 soybean meal consumption for fish farming was estimated at only 4.5 million tons. Current feed production and consumption estimates suggest that soybean meal inclusion doubled over last 10 years. Industry sources expect this trend will continue to grow to satisfy rapidly increasing fish production, both for export and domestic consumption.
With limited global supplies of high-priced fish meal, China’s fish industry was forced to turn to alternatives. Feed expense is the main cost in fish farming and can account for almost half of total input costs.
Fish meal, with its high protein content, has been a traditional ingredient but transitioning to less expensive soybean meal has become a necessity. This is generating more demand for imported soybeans.
Another changing industry in China is dairy, which alongside aquaculture is transitioning from backyard farming to more intensive commercial production. Urbanization, rising incomes, and the new two-child policy have contributed to growth in dairy consumption and growing consolidation and modernization of the industry.
As Chinese dairy farmers have been struggling with low milk prices, and many smaller producers are exiting the industry, further consolidation into larger and more efficient operations continues. While China’s dairy herd continues to contract, recent consolidations have led to improvements in animal genetics and production facilities that have enhanced efficiency.
Milk output per animal unit continues to rise and along with lower feed costs, industry profitability continues to improve. According to FAS/Beijing, small farms continue to withdraw from the dairy industry while farms with at least 100 head of dairy cattle are increasing.
For the first time, these larger farms will account for over half of the dairy cattle inventory in China. This transition also contributes to increasing demand for soybean products in China as a majority of commercial farms use soybean meal in mixed feed rations.
Increased demand for soybean meal in China continues to have a positive impact on global soybean trade. This demand growth comes from many sources, not only pork and poultry, but also through aquaculture and, to a lesser extent, dairy.
China’s soybean imports (October to April) stand at 49.6 million tons, 4.2 million more than during the same period last year. Imports so far this year from the United States total 33.4 million tons, over 6.8 million more than last marketing year.
USDA projects that in 2017/18 China’s demand for soybeans will continue to grow, creating more opportunities for U.S. producers and exporters.