China Increasing Soybean Imports, 4.4 billion bushels by 2022 – DTN

    China will import 95 million metric tons of soybeans in 2017/18 crop year, (3.49 billion bushels) then keep increasing imports an average 3.5 million tons per year for the following five years.

    In total, the country plans to import 110 mmt of soybeans (4.4 billion bushels) in 2022, said Liwei Zhang, director of market information at China Grain and Oil Information Center (CGOIC).

    Zhang made this estimate as he attended the American Soybean Association Beijing office as it celebrated its 35th anniversary recently.

    “From the year 2008 to 2016, China’s soybean import increased 6.2 mmt by year,” said Zhang. “Several reasons caused this huge import increase: first, Chinese government policy of floor price purchasing forced crushing plants to international markets, while most of the domestic beans were bought by the state reserve; second, Chinese domestic soybean production decreased, because of the lower comparative profit to other crops, such as corn and rice.

    “From this year on, to the following five years, we estimate that soybean import increase will be 3.5 to 4.0 mmt by year, due to increase in domestic production, and slowdown of feed demand,” said Zhang.

    Since 2015, China started a program to adjust the supply side of reforming farm products. One of the big changes will be to cut down corn acreage and increase soybean production. According to Ministry of Agriculture projections, by 2020, Chinese farmers will plant 140 million mu (23 million acres), with a yield of 30 bushels per acre, for a total output of 18.9 million tons (694 million bushels), an increase of 7 million tons from the year 2015.

    According to CGOIC, after so many years of faster development, Chinese feed production growth will slow down a little in the next five years. Feed production will increase to 220 mmt in 2020, from 210 mmt currently; this is an increase of 5% in five years.

    Meanwhile, China will increase ethanol production in the next five years. The country will produce 10 million tons of ethanol (1.66 billion gallons) by the year 2020, almost three times higher than the current level. “Increase in ethanol production will result in more DDGs production in the country, to substitute some of the soybean meal supply,” said Zhang.

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    Chinese feed companies had used more soybean meal than required in their feed products when the corn price was high and meal price was low in the past two years. Now, the Chinese government stopped its policy of supporting the corn price; the price ratio of corn to meal will become normal. The feed industry will return to its normal formula of soybean meal portion in feed. This will cut some of the meal demand.

    “However, the import trend is still positive, (the) U.S. will still be one of the largest suppliers of soybeans to China,” Zhang added.

    U.S. soybean delegations are optimistic of exporting soybeans to China. Thirty years ago, nobody knew how much animal protein the Chinese consumer would need; now, everybody knows China will become the largest soybean importer, said Jim Sutter, chief executive officer of U.S. Soybean Export Council. “What U.S. farmers did in China during the past 35 years was a great success.”

    “U.S. soybean farmers are reliable suppliers,” said Terry Branstad, newly arrived U.S. Ambassador to China. “We observed China as one of the largest soybean crushing and animal protein markets and we will continue to be the largest supplier of China.” Branstad was Iowa’s governor before he was appointed Ambassador to China by President Donald Trump.

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