April 12, 2012

China's soy imports to stay an uptrend in several years

For the next 10-15 years, China's soy imports are expected to maintain an uptrend with growth being driven primarily by the demand from urban residents.

"Soy imports are expected to grow substantially in the long term propelled by growing demand for oil and livestock feed," said Ma Wenfeng, a senior analyst at Beijing Orient Agribusiness Consultant, a major agricultural consultancy.

According to a USDA forecast, China's imports of soy are expected to go up by 62% to 90 million tonnes over the next 10 years.

"Soymeal, produced in China largely from imported soy, is an integral protein component of the feed necessary to support China's burgeoning pork, poultry and aquaculture industries," said the USDA in its first forecast 2012-13.

"Their rapidly maturing animal husbandry and feed industries, including aquaculture, expansion in crushing capacity and growing consumption of vegetable oils, are all driving demand which cannot be met by domestic supplies."

In recent years, each person in China has been consuming 5% more meat, 10% more milk, and 8% more cooking oil annually compared with five years ago, according to the National Bureau of Statistics.

China is the largest importer of US soy, and buys a quarter of the country's soy production. In February, when Vice-President Xi Jinping made a visit to the US, a Chinese trade delegation signed a deal to buy US soy with a total value of US$4.31 billion and volume of 8.62 million tonnes.

The nation became a dominant force in the international soy markets in the late 1990s and is now the world's largest importer and consumer, taking in 55 million tonnes in 2010, more than 50% of the annual global trade. Total soy consumption has risen 64% since 2005, but the self-sufficiency rate stands at about 20%, according to Customs.

Ma said it is more efficient for China to import soy than to produce them, as soy production needs more land and water supplies.

"China will be more susceptible to price fluctuations in the international food market with more soy imports," he said. "But during unfavourable weather conditions, the soy imports will keep the country insulated from international speculation and food-price fluctuations in the global market."