A new Rabobank report projects that China’s soybean imports will slow down and eventually decline through 2030 as a result of slower livestock production growth and continuous improvement in farming practices. More importantly, China’s inclusion rate of soymeal in feed rations is projected to drop, prompting a slowdown and eventual reduction in the country’s soybean imports that will have profound impacts on the entire global supply chain.
China is the world’s largest soybean importer, accounting for over 60% of global trade. Soybean demand is mostly influenced by feed demand and the soybean inclusion rate in those rations. Lief Chiang, Senior Analyst – Grains & Oilseeds at Rabobank, expects Chinese feed consumption will maintain low-single digit growth but projects the soymeal inclusion rate in feed will drop.
“While China will remain the largest importer, additional growth will shift from China to other regions and mainly be driven by emerging economies in the Middle East, Southeast Asia and South Asia,” said Chiang. “Merchants will need to realign their business for new destination markets and increase infrastructure investment in these regions.”
Rabobank also sees opportunities opening to other feed ingredient manufacturers as a result of China’s declining soymeal inclusion in feed. In particular, extra use of amino acids will be necessary to meet animal nutrition needs. Additionally, enzyme application will rise along with rising use of alternative protein meals, as alternative protein meals require more enzymes to improve nutrient absorption and reduce anti-nutritional factors.
Other novel feed protein sources such as insect and microbial proteins may also find new opportunities in China. As most of them are still in the development stage, however, Rabobank there is high uncertainty about the timeline to achieve commercial viability in China.
At the same time, Rabobank anticipates global soymeal trade volumes to increase at a fast pace. Driven by rising biofuel demand, the U.S. and Brazil are expected to expand their crushing capacities and process more beans domestically, keeping more soy oil for local use and exporting increasing volumes of soymeal. This will benefit integrated merchants, especially those with crushing plants in the Americas. The full report is HERE.
