January 10, 2023
Rabobank report sees slowdown and decline of China's soybean imports through 2030
A new report has projected that China's soybean imports will slow down and eventually decline through 2030 as a result of slower livestock production growth, continuous improvement in farming practices and widespread adoption of a low-soymeal inclusion ratio in feed formulas.
China is the world's largest soybean importer, accounting for over 60% of global trade, with soybean imports mainly driven by crushing for feed production.
Therefore, future imports will primarily be influenced by the outlook for feed demand and the soymeal inclusion rate in feed rations, according to the report compiled by Rabobank.
Lief Chiang, senior analyst (grains and oilseeds) at Rabobank, said: "We expect that Chinese feed consumption will maintain low single-digit growth.
"However, the inclusion rate of soya meal in feed rations is projected to drop, as the Chinese government is launching a soya meal reduction campaign aimed at lowering the dependence on imported soya beans to ensure food security."
The report indicated that the reduction of soymeal inclusion in feed will also create opportunities for start-ups to develop new technologies and novel ingredients.
Chenjun Pan, senior analyst (animal protein) at Rabobank, added: "In a low-soya meal inclusion scenario, extra use of amino acids will be necessary to meet the nutritional needs of animals."
Chinese amino acid players will benefit, but rising domestic demand might compromise producers' ability to export and prompt foreign buyers to diversify their supply chains, Rabobank explained.
Low-soymeal inclusion formulas will also bring opportunities to other feed ingredient manufacturers, according to the report, for example, enzyme application will rise along with rising use of alternative protein meals.
Additionally, there are a number of start-ups focusing on novel feed protein sources, such as insect and microbial proteins.
In the long run, it is expected that these novel proteins will make positive contributions toward saving natural resources and reducing carbon emissions, albeit there is uncertainty about the timeline for these in China.
The report stated that the projected slowdown and eventual reduction in China's soybean imports will have profound impacts on the entire global supply chain and reshape global trade flows. According to Rabobank, it will challenge all participants along the chain, including growers, trade merchants, soybean crushers, livestock farmers, feed mills and feed ingredient manufacturers.
Lief Chang added: "While China will remain the largest importer, additional growth will shift from China to other regions and mainly be driven by emerging economies in the Middle East, Southeast Asia and South Asia.
"Merchants will need to realign their business for new destination markets and increase infrastructure investment in these regions."
Moreover, global soymeal trade volume is projected to increase at a fast pace, the report added.
Driven by rising biofuel demand, the United States and Brazil are expected to expand their crushing capacities and process more beans domestically, keeping more soy oil for local use and exporting increasing volumes of soymeal.
After African swine fever (ASF) caused a decline in 2019, Chinese feed consumption registered rebounds in 2020 and 2021, according to the report. The growth was mainly driven by rapid hog herd rebuilding, positive farming margins and rising penetration of commercial feed during the period.
As the integrated feed-livestock model expanded and industry consolidation continued, in-house feed volumes experienced even higher growth.
In 2021, total feed consumption exceeded pre-ASF levels, reaching 450 million tonnes, of which hog feed, broiler feed, layer feed and aquaculture feed accounted for 90%.
For 2022, Rabobank expects feed consumption will have a slight drop of roughly 1% year-on-year, due to broiler and pig herd declines.
Since the sow herd was being built up in the final three months of 2022, it is projected that Chinese feed consumption will go back to its previous growth track in 2023 and beyond.