August 5, 2013


China's Jan-May soy imports fall, rapeseed increase



In January-May, China's soy import was 20.566 million tonnes, a fall by 12.2% on-year while import of rapeseeds was 1.655 million tonnes, a rise by 37.9% on-year.


The decrease of soy import in the first five months on-year has been mainly influenced by short-term factors like the logistics of the South America, which is the main production region of soy internationally. Normally, South American soy comes into the market in March, and enters the Chinese market in late April or early May. This year, there has been a great harvest of soy in South America, with production increasing by more than 32 million tonnes over last year.
However, due to the increase of export of Brazilian corn this year and the limited logistic capacity of the ports, the time of South American soy entering the Chinese market was delayed by 1-1.5 months. In June and July this year, South American soy enters the Chinese market collectively. It is learned that the quantity of soy arriving in Chinese ports in July will amount to more than seven million tonnes, making the historic record of monthly import of soy.


The main cause for the dramatic increase of rapeseed import in the first five months was that the price of international rapeseed was better than that of Chinese rapeseed, stimulating the enthusiasm of Chinese companies to import; the extraction structure of rapeseed in China has changed dramatically: extraction companies had circumvented the policy that forbid imported rapeseed from entering China's main rapeseed production regions. Large inflow of rapeseed into the coastal regions has resulted in production expansion in non-main production regions, accelerating the import of rapeseed.


Therefore, the short-term change of the import quantity of oil seeds won't have substantial influence on the annual total import volume. As the two main raw materials for edible plant oil, the increase of import of soy and rapeseed in recent years has developed a squeezing-away effect on the domestic oil seeds market, resulting in the gradual marginalisation of domestic soy and other oil seeds. The development of the Chinese soy industry is now in hot water, and some worry that the Chinese rapeseed industry may follow suit. 


Inadequate production capacity is the most fundamental cause of the sharp increase of oil seeds import. According to experts' estimation, China's annual demand for edible oil is 23 million tonnes, and the domestic supply amounts to only eight to nine million tonnes, leaving a demand gap of more than 15 million tonnes that needs to be filled by imported products. China has always been highly dependent on the foreign market for edible oil; the dependence rate is over 65%, its own supply rate being shy of 40%. As the development of urbanization accelerates, the space for the increase of consumption demand for edible oil stays vast. The problem of production of edible oil not being able to meet demand will become more prominent, and the dependence of oil and oil seeds on the foreign market may go even higher.


The key to increase China's plant oil self-sufficient rate lies in stabilising oil seeds planting area and increasing oil plant yield. According to information from the Ministry of Agriculture, in 2012, soy planting area in China was 107.58 million mu, yielding 13.02 million tonnes; planting area of peanut was 69.58 million mu, yielding 16.69 million tonnes; planting area of rapeseed was 111.48 million tonnes, yielding 14.01 million tonnes; planting are of sunflower was 13.33 million mu, yielding 2.32 million tonnes. Judging from the plantation of oil seeds in China, it would be difficult to see substantial increase of domestic oilseed supply. 


The most pressing fact at present is that both the oilseed plantation area and farmer's willingness to plant keep going down. The government should promulgate substantial support policy to stabilise the existing plantation area of oil seeds and adjust the plantation structure, maintaining the current plantation area of soy and rapeseed while increasing the plantation area of peanut, sunflower, and camellia, so as to gradually increase China's oilseed self-sufficient rate. 


China's oil and oilseed market is closely linked to the foreign market. Against the backdrop of the integration of the international market and the domestic market, only by forming a unity of the government and farmers can we resist the impact of the international oilseed market.


At present, as the problem of domestic oilseed production not being able to meet demand has not been substantially improved, import of oilseed in large quantity is inevitable. The government has adopted some measures to protect the domestic oilseed market and farmers' interest. In 2008, the government implemented temporary storage policy for soy, rapeseed and other oil seeds, making purchase through the market and increasing the purchase price yearly. This has played a positive role in stabilising the plantation area of oil plants and increasing farmer's planting willingness. However, the temporary storage policy is too much interfering in nature, greatly weakening the self-regulation ability of the market economy and affecting the entire industrial chain.

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