Analysts are starting to think the decline in China’s soybean meal consumption may not be as drastic as originally thought.
Soymeal has become so cheap in China due to the rapid spread of African swine fever that feed manufacturers are starting to increase the rate of inclusion of the ingredient in a variety of feeds.
There has also been an increase in use of the ingredient in poultry and fish diets because those alternative sources of protein take up more space on Chinese dinner plates at the expense of pork.
Read Also
VIDEO: The Western Producer Markets Desk crop outlook for 2025
Watch this video for a 10-minute update of Prairie crop conditions and markets. Bruce Burnett, a weather and market analyst…
Poultry demand for soybean meal is up 15 percent over last year, which is much more than originally anticipated, said Arlan Suderman, chief commodities economist with INTL FCStone.
The poultry sector takes a surprising amount of soybeans.
His contacts and clients in China’s feed industry consistently say that the hog industry accounts for 50 percent of total soybean meal consumption followed by poultry at 40 percent and aquaculture at 10 percent.
In aquaculture diets, soybean meal has been displacing canola meal due to the reduced canola crush caused by China shutting the doors on Canadian canola imports.
The net result is that Suderman now expects China’s soybean meal consumption to be down five percent in 2019.
“That is much stronger meal demand than what we had anticipated,” he said.
Suderman’s comments are reflected in recent statistics out of Shandong province, China’s largest feed-producing region.
A story on the Dim Sums web blog said Shandong produces 10 percent of China’s hog feed and one-third of its poultry feed.
Feed manufacturers in the province produced 2.18 million tonnes of swine feed in the January 2019 through April 2019 period. That was down 27.5 percent from the same period last year.
But they produced 3.93 million tonnes of poultry feed, which was up 8.6 percent year-on-year.
“Expansion of the poultry sector is muting the impact on feed production,” stated Dim Sums.
In fact, overall feed production was 10.45 million tonnes for the four-month period, which was 0.3 percent higher than a year ago. The statistics don’t include feed production for egg-laying poultry, aquaculture and ruminants.
Feed for nursery and starter pigs was down 46 percent, sows and young pigs fell 39 percent while the grower-finisher category dropped 17 percent, according to the Dim Sums story.
April’s nursery and starter pig feed numbers were up four percent from March, which was interpreted as a sign that the restocking of China’s hog herd has begun.
Suderman laughed when he heard that part of the analysis.
“That’s certainly contrary to what we’re being told,” he said.
He thinks the rebuild could take five to seven years.
Suderman said the better-than-expected soybean meal use in China is a positive development but it won’t do much for the overall bearish outlook for the crop.
There is a big soybean crop coming off in South America that is going to continue to weigh down prices unless there is a crop failure in the United States, which is becoming a possibility.
“The big question is, what’s the weather going to do? And right now it’s looking very threatening,” he said.
Delayed seeding and the cool, wet weather are putting trendline yields in jeopardy. And there will likely be fewer double-crop soybean acres than usual because the winter wheat crop has been slow to mature.
