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Is a key forecast for Chinese soybean demand too upbeat?

US government officials based in Beijing differ with their stateside colleagues on prospects for Chinese soybean import demand, to the tune of 2.0m tonnes.

As well as forecasting a slower pace of soymeal demand growth, US Department of Agriculture officials in Beijing have a slightly more upbeat view of Chinese domestic production than the official forecasts have factored in.
And the Chinese restriction on genetically modified grain imports are also expected to affect demand.

Rising soybean demand

On Friday the US Department of Agriculture's monthly Wasde report forecast soybean imports in China, the world's top consumer, at 87.0m tonnes, up nearly 5% year on year.

With soybean demand outstripping imports and production, 2016-17 end stocks were seen shrinking by some 1.75m tonnes year-on-year, to 14.48m tonnes.

This was slightly down from last month's estimate, due to a 200,000 tonnes trim to the estimate of stocks carried in from the 2015-16 marketing year.

But pace of growth could be slower than thought…

But the USDA's bureau in Beijing have offered slightly more downbeat forecast, at 85.0m tonnes, although this would still represent an all-time record.

And the USDA's Beijing bureau saw 2015-16 Chinese soybean imports at 82.0m tonnes, 1.0m tonnes behind the official USDA forecast.

"In addition, the government's decision to release soybean reserves sometime in 2016, could slightly impact import growth in 2015-16," the bureau said.

If the Beijing bureau's forecasts were factored in to the official USDA global balance, the size of the 2016-17 soybean deficit would fall by a third, to about 4m tonnes. 

Soymeal demand rises with livestock boom

The lower import number is down to a smaller crush number, representing a slower pace of soybean processing.

This suggests that soymeal demand, for use as feed in the country's livestock sector, is not booming quite as fast as assumed.

Chinese pork production is recovering after a largescale industry rationalisation, after profit margins for pig producers widened.

GM restrictions

"China's recovering swine production and the increasing use of industry feed in scale farming continue to boost protein meal demand," said the bureau.

But it argued that "these trends only support a net growth of about 3.0m tonnes in soybean imports during 2016-17.

And restrictions on genetically modified soybeans are weighing on import prospects as well.

"China's strengthened restrictions in using imported biotech soybeans for food processing rather than crushing is expected to moderately impact import growth rate for soybeans in 2016-17 and beyond," the bureau said.
--Adapted from http://www.agrimoney.com/--

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