Chinese 2022–23 Initial Soybean Import Forecast Revised Down

Owing to the growing demand for feed, improved margins, higher prices for soybean substitutes rich in protein and reduced availability, industry players had expected Chinese soybean import demand to be close to a record 100 million mt in the current 2022-23 marketing year. Imports in the 2020-21 year were at a record 100 million mt 7% up the 5-year average and 1 million mt up from imports in the previous marketing year. In the 2021-22 marketing year, however, demand fell by 8 million mt to 92 million.

The initial forecast from the United States Department of Agriculture (USDA) for the current marketing year, 2022-23, puts the number at 96 million mt, a slight improvement from 2021-22. An uptick in September last year when Chinese imports went up 12% to 7.7 million mt YoY on a pickup in demand for soymeal for animal feed suggested somehow that the new season would see imports push further up. Also, despite efforts by the Chinese government to increase domestic oilseeds production, consumption surpasses production. The shortfall is thus expected to be offset by imports from the rest of the world.

Be that as it may, data collected suggest imports for the first quarter of the 2022-23 marketing year are lagging, already down to 21.5 million mt 5% down from the same period the previous marketing year. Chinese imports for the 2022-23 marketing year has thus been revised down by 2 million mt to 94 million mt.

China processes over 80% of soybean imports into animal feed and has already seen its crush in the first quarter of the 2022-23 marketing year not rise as expected. It has rather been assessed as marginally down YoY while imports of other oils and oilseeds with competitive prices have edged up. Tridge’s oilseeds market expert has thus said, the increase in other oils/ oilseeds import may have been to offset the shortfall in soybean import.

But would we continue to see a dip in Chinese soybean imports? If the announcement in September last year by the Chinese Ministry of Agriculture and Rural Affairs that promised to comprehensively reduce the use of soybean meal in feed amid efforts to ensure national food security is anything to go by, then we may see a gradual decrease in China’s oilseed imports.(We wrote about this few weeks ago. See)

China’s policy pertaining corvid-19 and the stringent restriction measures seem to be stifling domestic demand for soybeans. That together with continuous improvement in farming practices and general implementation of smaller inclusion rates in feed formulas, according to reports from some quarters may keep the need for soybean imports down.

Also, a projected slowdown in the global economy and the uncertainty surrounding that slowdown is also casting doubt on any recovery in demand in the agricultural commodity trade. In the fruit and vegetable market for example, “demand is likely to soften in key markets such as in the EU and UK” according to Tridge’s Juan Carlos. Similar views exist in the nuts market. The doubt thus echoed for Chinese soybean demand is not out of place.

That said, if Chinese demand in the marketing year however changes from falling to increasing, there is enough supply to satisfy demand: South American soybean production for the 2022-23 crop year is projected at a record 272 million mt up 27 million mt from the previous marketing year. In addition, as soon as the south American crop hits the market, it may cause soybean prices to push down aiding Chinese buyers to make purchases at reasonably discounted prices.