China soyabean imports may have reached peak

Accounting for over 60% of global trade, China is the world’s largest soyabean importer, with soyabean imports mainly driven by crushing for feed production. For this reason, future imports would mainly be influenced by the outlook for feed demand and the soyabean meal inclusion rate in feed, the 9 January report said.

“We expect that Chinese feed consumption will maintain low single-digit growth,” Lief Chiang, senior analyst, grains and oilseeds, at Rabobank, was quoted as saying.

“However, the inclusion rate of soyabean meal in feed rations is projected to drop, as the Chinese government is launching a soyabean meal reduction campaign aimed at lowering the dependence on imported soyabeans to ensure food security.”

Reduced soyabean meal ratios in feed would also create opportunities for start-ups to develop new technologies and novel ingredients, the report said.

“In a low-soyabean meal inclusion scenario, extra use of amino acids will be necessary to meet the nutritional needs of animals,” Chenjun Pan, senior analyst, animal protein, at Rabobank, was quoted as saying.

Chinese amino acid manufacturers would also benefit, the report said, although rising domestic demand could compromise producers’ ability to export and prompt foreign buyers to diversify their supply chains.

In addition, low soyabean meal inclusion formulas would bring opportunities to other feed ingredient manufacturers, the report said. For example, enzyme application would rise along with increased use of alternative protein meals, as alternative protein meals require more enzymes to improve nutrient absorption and reduce anti-nutritional factors. A number of start-ups focusing on novel feed protein sources, such as insect and microbial proteins, had also been set up.

In the long term, these novel proteins would help save natural resources and reduce carbon emissions, the Rabobank researchers said. However, as most of them were still in the development stage, there was a lot of uncertainty about when they would achieve commercial viability in China.

The projected slowdown and eventual reduction in China’s soybean imports would have profound impacts on the entire global supply chain and reshape global trade flows, the report said, affecting all participants along the chain, including growers, trade merchants, soyabean crushers, livestock farmers, feed mills, and feed ingredient manufacturers.

“While China will remain the largest importer, additional growth will shift from China to other regions and mainly be driven by emerging economies in the Middle East, Southeast Asia, and South Asia. Merchants will need to realign their business for new destination markets and increase infrastructure investment in these regions,” Chiang said.

Meanwhile, global soyabean meal trade volume is projected to increase at a fast pace, according to the report.

Driven by rising biofuel demand, Brazil and the USA were expected to expand their crushing capacities and process more beans domestically, keeping more soyabean oil for local use and exporting increasing volumes of soyabean meal. This would benefit integrated merchants, especially those with crushing plants in the Americas.

While soyabean meal inclusion in feed is the largest determinant of China’s soyabean imports, other variables could also impact soyabean import forecasts, the report said.

“Rising domestic soyabean production and direct soyabean meal imports would further lower the import forecast, while state stock buying would lift import quantities in some years,” Chiang explained.

“The government puts a high emphasis on food security, so it might encourage imports or conduct stock buying to replenish state reserves as a buffer against various risks like adverse weather, supply chain disruptions, geopolitical tensions, natural disasters, and so on. Complex economic relationships might also lead to state purchases to balance trade accounts.”

“Though additional government procurement will temporarily increase import projections in some years, the impact would be short term,” Chiang added.