June 3, 2011
China's soy crop to fall twice as far as expected
China's soy harvest will decline twice as far as forecasted this year thanks to the better returns to be obtained from other crops, which will cut area devoted to the oilseed to the lowest of the century.
China's soy harvest will fall by roughly 800,000 tonnes to 14.4 million tonnes, USDA attaches in Beijing said.
The deeper cut than acknowledged in an official USDA estimate of a 14.8-million-tonne harvest reflects the greater profits achieved in corn in 2010-11, at an average of US$700 per hectare, than from soy, which earned farmers US$500 a hectare.
"The difference has negatively impacted some soy planting decisions for 2011-12," the attaches said in a report.
In the important producing province of Heilongjiang sowings are expected to tumble by 10-20%, particularly in central areas "where weather and growing conditions provide farmers more choices for grain crops", the briefing said, quoting information from "industry sources".
In other provinces, soy are expected to lose out to cotton, for which national sowings are expected to increase by 6.6% to 5.4 million hectares, the China Cotton Association said on Thursday. The estimated rise in cotton area is, nonetheless, smaller than a 9.8% rise forecast in January.
China's overall soy area, on a harvested basis, was pegged at 8.5 million hectares, 200,000 hectares lower than the current USDA estimate and the lowest since 1999.
The extent of the decline will exacerbate a production deficit in China, the world's top soy consumer and importer.
Indeed, the attaches stuck by an estimate of 72.5 million tonnes for soy use in 2011-12, "due to increased use of oilseed byproducts in animal production, and higher vegetable oil consumption" as wealthier consumers eat more and better.
Consumption of all protein meals is expected to rise by 6% to 65.6 million tonnes, fuelled by rising hog production, which has hit a three-year high.
However, the attaches declined to raise their forecast for China's soy imports in 2011-12, standing by an estimate of 58 million tonnes, of which 25 million tonnes are expected to come from the US, and viewing the extra shortfall being made up from inventories.
China's soy imports are a matter of market sensitivity, given their scope, accounting for nearly 60% of total world buy-ins.
The country imported 5.4 million tonnes of soy in May, sufficient to keep the country on track to meet a USDA forecast for 2010-11 lowered to 54.5 million tonnes.
US shipments and export sales in the latest week were, at 412,000 tonnes and 163,000 tonnes respectively, above the pace needed to meet USDA forecasts.
