You are here

China Set to Trim 2018/19 Soybean Imports as Trade Row Boosts Prices

BEIJING, May 10 (Reuters) - China will cut its soybean imports for the first time in 15 years in 2018/19, the agriculture ministry forecast on Thursday, as a trade spat with the United States pushes pig farmers in the world's top buyer to seek cheaper proteins.

In its first predictions for the upcoming crop year which starts in October, the Ministry of Agriculture and Rural Affairs said soybean imports were expected to dip 0.3 percent to 95.65 million tonnes.

That would be the first decline since 2003/04, according to data from the United States agriculture department.

The forecast will unnerve top exporter Brazil, which has harvested a record crop this year. It will also add to worries for farmers in the United States, who have already seen exports to China dry up after Beijing threatened to slap an additional 25 percent tariff on U.S. soybeans, in retaliation for trade actions taken by President Donald Trump.

The threat of hefty tariffs has pushed up the price of soymeal and sent feedmakers scurrying to source alternative sources of protein for farmers already grappling with hog prices at multi-year lows.

Live hog prices in China plunged by around 30 percent in the first quarter, one of the steepest declines ever recorded, after a significant increase in production by new farms boosted pork supplies.

Prices are still at eight-year lows, with producers across the board losing money, and most expect losses to continue into next year.

"While the development of livestock farmers is driving an increase in consumption of feed raw materials, the fall in profits for pig farming will lead to reduced use of protein in feed, and in addition to higher supply of DDGS and other meals, demand growth of soymeal will slow," said the ministry.

China is expanding production of ethanol under a new policy to boost the consumption of corn. The push will see higher supplies of the ethanol byproduct, dried distillers grain (DDGS), reaching the animal feed market.

China's own soybean production is also set to grow, with 2018/19 output forecast to rise 4.9 percent to 15.27 million tonnes, the ministry said.

Soybean farmers are getting additional support following the launch of an "emergency" campaign this month to boost output.

Soybean acreage will increase by 7.8 percent to 8.39 million hectares (20.7 million acres), although lower rainfall in Inner Mongolia will curb yields.

Higher subsidies for soy farmers will eat into corn planting however, with output set to fall 2.9 percent to 210 million tonnes, it said.

"Relatively severe" drought in some parts of the northeast was also expected to hurt corn yields.

Beijing has embarked on a major push to reduce its corn planting to whittle down a huge overhang of stocks, while supporting soybean planting in its place.

(Reporting by Dominique Patton; editing by Richard Pullin and Christian Schmollinger)

© Copyright Thomson Reuters 2018. Click For Restrictions -

Read more about

Tip of the Day

Tech Tip: Do the Research

Before you make a purchase, do some research on the piece of technology you want to buy. This helps ensure you're not overpaying but also... read more

Talk in Marketing