CHINA— United States Department of Agriculture forecasts China’s total oilseed production at 63.4 MMT in MY 22/23 based on planted area at 25.15 million hectares (MHa), up 4 percent and 4.8 percent, respectively, from the previous year, owing to favorable government policies and high prices for major oilseeds.
Soybean and rapeseed production for MY 22/23 are forecast to reach 18.4 MMT and 14.8 MMT, respectively, on expanded area driven by high domestic prices and government policies incentivizing oilseed production.
Similarly, MY 22/23 cotton seed production is maintained at 9.55 MMT based on slight recovery of cotton area driven by stable government subsidy and a relative increase of cotton price.
Post lowers its forecast MY 22/23 peanut production to 18 MMT, down from the previous Post forecast of 18.3 MMT due to lower planted area. Declining prices and weaker demand have lowered profitability compared to other crops. Additionally, increased government support for soybeans in tandem with higher prices for fertilizers, pesticide, and plastic film are expected to further reduce peanut area.
PRC zero-COVID policy impacts consumption
Based on higher prices, declining feed use, and uncertainty regarding PRC zero-COVID policy and its outsize impact on food service sector consumption, Post lowers MY 21/22 vegetable oil consumption for food use to 33.8 MMT from the previous estimate of 35.9 MMT.
Total oilseeds for crushing in MY 22/23 is forecast at 131.7 MMT, up from an estimated 127.5 MMT in MY 21/22, driven by demand recovery for protein meals in the feed sector which experienced weak demand in MY 21/22 as the swine and poultry industries struggled with low to negative margins and weakened consumption due to slowed economic growth, partly attributed to the PRC’s zero-COVID policy.
Forecast demand of soybeans for food use is expected to continue to grow at 4 percent, reaching 15.4 MMT in MY 22/23, up from the estimated 14.8 MMT in MY 21/22.
Ease of COVID restrictions favor trade
Post revises MY 21/22 soybean imports down 1 MMT to 94 MMT from its previous estimate due to ongoing weak demand for vegetable oil in the food service sector and slowly recovering margins in the swine and poultry sectors.
Post maintains rapeseed imports for MY 22/23 at 2.7 MMT, up from an estimated 1.9 MMT in MY21/22. Rapeseed imports have declined since 2019 due to COVID related trade tensions with Canada, its primary supplier. In a sign of easing tensions, China lifted its ban on two large Canadian rapeseed suppliers in mid-May and Rapeseed imports are expected to recover in MY 22/23 on higher Canadian production
Post lowers MY 21/22 peanut imports to 700,000 MT from a previous estimate of 1.1 MMT reflecting weak domestic demand for peanut products and oil due to COVID-related restrictions and higher ocean freight costs reducing price competitiveness. Post maintains MY 22/23 imports at 1.1 MMT on expected lower domestic production and recovering consumption.
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