Domestic soybean production in China is forecast to reach 18 MMT in MY 2020/21 in response to a stable subsidy rate and higher soybean prices during the sowing months in 2020, finds a US Department of Agriculture (USDA) report.
Good weather conditions ensured a moderate gain of rapeseed production in China in MY 2020/21. Increased soybean crushing in the Asian behemoth will constrain vegetable oil imports in MY 2020/21, said the US federal agency.
A deeper dive…
Domestic soybean production in China in 2020/21 will be up 0.7 million metric tons (MMT) from the previous report due to a stable subsidy rate and higher soybean prices during the sowing season. The MY 2020/21 planted area is forecast 0.4 million hectares (MHa) higher than the last USDA outlook, at 9.5 MHa.
Overall, soybean sowing in China was completed by the end of May, plant sprouting was supported by sufficient rainfall in the Northeast region, and crop growth remained normal through June, said the USDA.
The forecasts for soybean meal (SBM) use and soybean crush in China are both up significantly from the last report, due to increased feed demand from anticipated production growth in the swine and poultry sectors.
MY 2020/21 SBM feed use for that market is forecast at 69.8 MMT and soy crush at 91 MMT, revised up nearly 5 MMT and 6 MMT respectively.
China’s Ministry of Agriculture and Rural Affairs (MARA) data indicates eight consecutive months of expansion of the sow inventory and four months of growth of the hog herd, with a net growth of 38 million hog heads between the end of 2019 and May 2020.
Coronavirus impact, imports outlook
China’s vegetable oil use was diminished by the impact of the early 2020 coronavirus outbreak, including widespread restaurant closures, according to the US publication.
“A new outbreak in Beijing in mid-June is expected to delay the return pre-COVID business operations, suppressing vegetable oil demand. However, oil consumption is anticipated to recover in MY 2020/21 as government control measures gradually take effect.”
The USDA GAIN report forecast for MY 2020/21 soybean imports into China is 91 MMT, up 5 MMT from the previous report based, said the team, on the continuing recovery of feed use for swine and poultry.
Likewise, the estimate for MY 2019/20 imports is up 6 MMT from the last report to 84 MMT, mainly attributed to importer concerns about the potential impact of COVID-19 on soybean supplies from Brazil and a move to stock up in preparation for possible Covid-related supply disruptions.
Higher than average imports from Brazil resulted in record soybean arrivals in May and June 2020, noted the USDA market specialists.
Soybean imports exceeded 58 MMT in the first eight months of the marketing year, and June imports are likely to surpass 10 MMT, they expect.
Lower than normal rapeseed imports are also expected to push up soybean imports as a substitute, they said.
Forecast MY20/21 rapeseed imports are unchanged from the previous report at 2.5 MMT, significantly below the five-year average of about 4 MMT due to trade friction with China’s main supplier, Canada.