A China went on to use an unprecedented amount of wheat rich in protein in feed, a measure that can lead mills to reduce the mix of soybean meal and keep growing imports under control.
The government has offered huge volumes of cheaper state wheat for sale so that feed producers can replace the expensive domestic corn. More than 24 million tonnes of wheat have been sold from reserves this year, and the volume is expected to increase to 40 million to 50 million tonnes in the current season ending in May, according to the National Grain and Oil Information Center of China. (CNGOIC).
With this amount of wheat, with a protein content 4% higher than that of corn, the use of soybean meal can drop by up to 2 million tons, or the equivalent of 5 million tons of Soy, according to Lin Guofa, senior analyst at Bric Agriculture Group. The government will continue to sell state rice at the same time and will reduce the volume of wheat until May, the country’s wheat harvest period, Lin said.
This could reduce China’s soybean import estimates, which hit a record high last year to feed the replacement hog herd after the impact of African swine fever.
The buying spree drove global prices amid investor concerns about supply. Grain prices rose again this week with the US forecast for the next planting season below expectations. Some analysts say estimates for soy are too low considering strong Chinese demand.
With new cases of African swine fever, weaker demand for bran has resulted in a 25% drop in soybean crushing in recent weeks from a maximum of 2 million tonnes per week recorded last year, said Hou Xueling, an analyst from Everbright Futures.
The low crushing volume has caused a shortage of edible oils and could increase imports of products such as soybean oil and rapeseed oil, Hou said. She expects demand for soybean meal to improve in the second half.
Total soy purchases from China will remain high. Imports are expected to recover in April, after large shipments from Brazil, the country’s main supplier, according to the CNGOIC. March shipments were estimated at 6.2 million tonnes, up from 5.56 million in February, which was the lowest level in a year. The center expects annual imports to remain stable in 2020-21 from 98 million tonnes a year ago.
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