Soymeal Demand Slowing in China

The economic factors are contributing to slowing soybean meal demand in China. Reports say that the slower pace of the Chinese economic growth has impacted domestic meat demand, specifically chicken and pork, and consequently, production.

The African Swine Fever (ASF) resulted in lower domestic pork production relative to prior years, but the production had rebounded in 2021. Studies show that pork and chicken production is expected to remain relatively unchanged in 2022, which is slightly lower than the combined production 1 decade ago i.e. year 2012. This is important when considering soybean demand. China is the largest importer of soybeans and depends largely on the meal from crushed soybeans in feed for livestock production.

The USDA has recently lowered the import forecast for Chinese soybean crush and import forecasts by 3 million metric tons to 94 million and 97 million metric tons, respectively. This was done because of poor crush margins, dropping to negative values at times, have slowed the crush rate and, consequently, October 2021–January 2022 imports.

The pork and chicken production estimates suggest that the projected 2021/22 soybean crush volume remains relatively unchanged from 2020/21, up 1 million metric tons. The reduced crush forecast has resulted in a lower soybean oil production forecast of 16.85 million metric tons, down 540,000. This is compensated through forecasts of lower domestic soybean oil consumption and lower ending stocks.

China is heavily dependent on soybean purchases as it processes more than 80% of imported beans into animal feed, but the crushers expect the oilseed demand to slacken at least in the first half of 2022 considering China’s female swine population, on a downtrend over the last few months.

According to local crushers the pig farmers have lost hundreds of yuan on each pig during the second half of 2021, which forced many breeders to reduce their capacity. The reduced pig numbers are likely to adversely impact the demand growth for soybean-based animal feed.