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Chinese soybean imports to rise despite pullback in hog herd

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Swine sector continues to account for approximately 40-45% of China’s soybean meal consumption.

As the country continues to recover from the impact of African swine fever (ASF), China’s soybean imports are expected to be even higher during marketing year 2021/22, at 101 million metric tons (MMT), due to increasing demand for soybean meal and soybean oil and lower imports of rapeseed, according to a U.S. Department of Agriculture “Global Agricultural Information Network” report. China’s soybean imports in 2020/21 had already reached a record 99.8 MMT due to high feed demand in the swine and poultry sectors. The U.S. share of those soybean imports was 37.2%.

USDA Foreign Agriculture Service (FAS) staff in China relayed that the swine sector continues to account for approximately 40-45% of China’s soybean meal consumption. China’s National Statistics Bureau (NSB) data showed as of September 2021, the live pig inventory stood at 437.6 million heads, up 18.2% from the same period last year. Breeding sows accounted for 44.59 million of that, which was a 16.7% over the same period last year. FAS said this is much higher than the ministry of agriculture’s annual 41 million breeding sows target during the 2021 to 2025 period.

To address concerns of excess capacity, FAS said China’s Ministry of Agriculture and Rural Affairs (MARA) has encouraged the industry to restructure by eliminating low efficiency sows to reduce over-supply and minimize losses. However, a Chinese industry source estimated breeding sows were already reduced 41.3 million by the end of August, which the GAIN report said calls into question the NSB’s September sow figures.

According to NSB, total meat production increased to 64.28 MMT in the first three quarters of 2021, up 22.4% from the previous year. FAS staff pointed out that yearly meat production before the ASF outbreak averaged 86.8 MMT from 2015 to 2017, according to the NSB.

“Given the sharp decline of pork prices throughout 2021 and producer losses beginning in June 2021, it remains to be seen if prices will stabilize and producers return to profit by the end of the year. Ongoing efforts to lower sow production along with expected higher demand in the lead up to the Chinese Lunar New Year will likely raise prices and producer margins in 2022,” the GAIN report noted.

In its “Pork Quarterly Q4 2021,” Rabobank relayed that hog prices were down 60% year over year at the end of September.

“Producers have posted six months of losses, forcing them to cull their herd or exit the market entirely,” the firm reported.

Rabobank said it expects pork supplies will remain ample following herd reduction and previous restocking. However, it said supplies could be short if economic trends improve. Currently, however, demand remains weak due to dining restrictions associated with the ongoing COVID-19 pandemic.

Based on MARA surveys, FAS said total feed production during the first nine months of 2021 was 218.4 MMT, up 16.9% from the previous year. Of the total, swine feed was 95.1 MMT, aquatic feed was 19.7 MMT and ruminant feed was 10.4 MMT, up 56.2%, 13.2%, and 13.3%, respectively, from the previous year. Layer feed and broiler feed, on the other hand, have been down by 9.7% and 5.2%, respectively, from the previous year.

“It is worth noting that reported total feed production in September declined 2.5% from August, although up 2.7% from the previous year,” FAS staff said, adding that swine feed in September was 11 MMT, down 1.7% from August but 19.9% higher than the previous year.

As swine production continues to recover and production at large-scale farms increases, FAS staff said soybean meal (SBM) consumption is expected to rise. FAS forecasts MY 21/22 SBM feed use at 75.3 MMT compared to an estimated 72.9 MMT in MY 20/21.

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