China’s demand for oilseed increases despite Swine Fever concerns

USA – Demand for oilseed from China has increased bolstered by rising chicken, beef and aquaculture production despite the recent health concerns around the African swine fever (ASF) outbreak.

According to Global Agricultural Information Network (GAIN) report from the Foreign Agricultural Service of the U.S. Department of Agriculture (USDA), this trend will see increase in oilseed imports by the Asian country.

It is estimated that China’s 2019/20 soybean production will stand at 16.4 million tonnes, a 4% increase from the previous year.

The increase is attributed to changes in government grain subsidies, which led to lower corn profits in market year 2017-18, encouraging farmers to plant more soybeans.

Data from China National Grains and Oilseeds Information Center (CNGOIC) shows that as of the end of December 2018, farmers held about 70% of their production, compared to 50% to 60% in recent years.

USDA suggests that China’s domestic oilseed production will remain stagnant in the 2019-20 marketing year, while domestic demand for oilseed products will continue to grow steadily, despite the impact of ASF.

China will thus continue to rely on oilseed imports from Brazil, the United States, Argentina and Canada.

“In late February 2019, citing the need to stabilize the market, the Heilongjiang provincial government offered farmers a soybean purchase price between US$518 and US$525 per tonne,” the USDA said.

“The relatively slow marketing pace for the market year 2018-19 crop may overshadow soybean sowing in market year 2019-20.”

China’s soybean imports for market year 2019-20 is forecast to reach 91.5 million tonnes, an increase from the estimated 88 million tonnes in market year 2018-19 but lower than the market year 2017-18 imports of 94.1 million tonnes.

Some of the oilseed import decrease is attributed to the ASF outbreak as well as the trade debacle between US and China, even though talks are underway to resolve this issue.

In July last year, China stopped some soybean imports from the US after a series of tariff barriers were put in place on critical goods.

Imports were further dampened as China imposed an additional 25% import tariff on U.S. soybeans.

“Accompanying bilateral trade talks, sales of U.S. soybeans to China began December 2018, mainly by state-owned importers,” the USDA said. “

In February, China indicated plans to purchase another 10 million tonnes of U.S. soybeans, in addition to the 10 million contracted in December 2018 and February 2019.

“According to industry contacts, soybean imports from the U.S. remain commercially difficult.”

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