December 31, 2013

The International Grains Council's (IGC) "Five-Year Global Supply and Demand Projections" issued on December 10 stated that China's rice and soy production will have a downward trend in the next five years while a steady increase production of wheat and corn are expected.

Lower domestic soy production will make China even more dependent on imports. The IGC forecast China's 2014 soy crop at 12.5 million tonnes, down 600,000 tonnes from the estimate for the current year. Soy production has been in decline in recent years with the recent high outturn registered in 2010 at 15.1 million tonnes.

China's soy production was forecast to decline steadily in the next five years and will reach only 11.8 million tonnes in 2018-19, the final year in the IGC's medium-term outlook.

The IGC commented, "Soy farms in China are typically rather small, often utilising outdated cultivation practices, thus restricting the potential for substantial yield advances. Given that land expansion is also a limiting factor, as most arable land is already in use, farmers tend to focus on higher-yielding crops, such as corn. Consequently, soy sowings in China are projected to decline over the outlook period, further increasing reliance on trade to meet expanding consumption requirements."

The IGC forecast China's 2014-15 soy imports at 71.5 million tonnes, up 3.5 million tonnes from the 68-million-tonne forecast for the current year and compared with 59.5 million tonnes in 2012-13 and 57.4 million tonnes in 2011-12. The IGC forecast China's soy imports to rise steadily and reach 83.5 million tonnes in 2018-19.

IGC also said that due to China's increasing import requirements, global trade (in soy, October-September) is projected to expand by more than 3% in 2014-15 and by 2.1% per year thereafter and reach 123 million tonnes by 2018-19, which will continue to account for more than two-thirds of world traded volumes," the IGC said.

The IGC noted China's soy crop was mainly geared toward supplying the domestic food industry, whose demand for soy products was falling. In contrast, booming demand for soy to be processed into soymeal to support rapid growth in poultry and swine production in the past decade ignited a surge in soy imports.

In the case of rice, the IGC pointed to a slight reduction in demand in China. The IGC said, "China's rice consumption is expected to peak in 2014-15 before edging lower as rising incomes promote a further shift to increased protein consumption at the expense of traditional staples."