Oilseeds and Products Update

An Expert's View about Agriculture and Animal Husbandry in China

Last updated: 15 Jun 2011

MY11/12 soybean production is forecast down at 14.4 MMT, a fall from the estimated 15.2 MMT in the previous year. The change is due primarily to a forecasted smaller planting area, mainly in Northeast China, due to higher grain versus soybean profits last year.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 5/28/2011 GAIN Report Number: CH11032 China - Peoples Republic of Oilseeds and Products Update Approved By: Scott Sindelar Prepared By: Melinda M. Meador and Wu Xinping Report Highlights: MY11/12 soybean imports are forecast at 58 million metric tons (MMT), unchanged from the March forecast, but 3.5 MMT higher than MY 10/11 estimated imports of 54.5 MMT. MY11/12 soybean production is forecast at 14.4 MMT, down from last year?s estimated 15.2 MMT. MY11/12 rapeseed production is forecast at 12.8 MMT unchanged from the previous year. Growth in consumer income and changing dietary trends will drive soybean imports to 58 MMT in MY11/12 to meet increasing demand for vegetable oils and animal products. Executive Summary: MY11/12 soybean production is forecast down at 14.4 MMT, a fall from the estimated 15.2 MMT in the previous year. The change is due primarily to a forecasted smaller planting area, mainly in Northeast China, due to higher grain versus soybean profits last year. MY11/12 soybean imports are forecast at 58 million metric tons (MMT), unchanged from the previous report, but 3.5 MMT higher than estimated imports of 54.5 MMT in MY10/11. MY11/12 rapeseed production is forecast at 12.8 MMT, unchanged from the previous year, with a smaller planting area decline offset by higher yields resulting from favorable weather conditions in major production regions. Total oilseed demand is expected to continue its growth trend in MY11/12 due to increased use of oilseed by-products in animal production and higher vegetable oil consumption, fueled changing dietary demands associated with continuing strong domestic growth (above nine percent) in 2011 and elevated disposable income. MY11/12 consumption of protein meal is forecast to rise to 65.6 MMT, up six percent from the estimated 61.8 MMT in the previous year, and vegetable oil consumption at 27.8 MMT, up 5.7 percent from the 27.2 MMT in MY10/11. MY11/12 Soybean production forecast falls to 14.4 MMT Industry sources estimated that, despite an overall price increase for soybeans (up 6 percent) and corn (up 13 percent), the average profit for soybeans and corn were $500/Ha, and $700/Ha, respectively, based on the average yield, farm-gate purchasing prices and production costs in MY10/11. This difference has negatively impacted some soybean planting decisions for MY 11.12. MY11/12 soybean production is forecast at 14.4 MMT, lower than the previous year?s estimated 15.2 MMT due to reduced planted area of 8.5 MHa (from 8.8 MHa in the previous year) and an average yield at 1.7 MT/Ha. Heilongjiang Province, with forecast planted of 3.35 MHa, down 200,000 Ha from last year, reports the largest drop in planting area due to lower soybean profits relative to corn and rice in MY 10/11. In late May, China?s National Grain and Oils Information Center (CNGOIC) forecast a MY11/12 soybean production drop to 14 MMT based on reduced planted area of 8.2 MHa. In mid-May, China?s industry sources forecast MY11/12 soybean planting area in Heilongjiang would fall by 10 to 20 percent, particularly in the central province where weather and growing conditions provide farmers more choices for grain crops. Inner Mongolia, Jilin and Liaoning Province soybean planting areas are also expected to fall to the benefit, primarily, of corn crops. In the Yellow river region, (including Shandong, Henan and Hebei provinces), farmers are expected to increase cotton area by 4 percent at the expense of soybean area in MY 11/12. In the southern provinces, including Anhui and Jiangsu, however, MY11/12 soybean planting area is expected to remain stable. Relatively higher profits from local food demand usage helps maintain a stable planting area. The above chart shows China?s soybean planted area changes from 2008 to 2011. (Source: 2008-2009-China Agriculture Statistics Report; 2010-CNGOIC report and Heilongjiang Statistics Bureau; 2011- Post forecast). MY11/12 soybean imports are forecast at 58 MMT Soybean imports for MY11/12 are forecast at 58 MMT (unchanged from the 2011 Oilseed Annual), up 6.4 percent from the 54.5 MMT in MY10/11 due to continuing growth in protein meal demands by China?s animal and aquaculture sectors, vegetable oil consumption fueled by high GDP growth, falling domestic production and excessive soybean crush capacity. The MY10/11 soybean imports were adjusted down by 500,000 MT from 55 MMT in the 2011 Oilseed Annual. Relatively high soybean imports in the first half of MY10/11, coupled with China?s release of 3 MMT of soybean reserve/stocks in April, however, curbed import growth in the second half of MY10/11. Soybean imports in MY11/12 are forecast to grow at an average rate driven by increase of consumption of protein meal forecast at 65.6 MMT, up six percent from the estimated 61.8 MMT in the previous year, and vegetable oil consumption at 27.8 MMT, up 5.7 percent from the 27.2 MMT in MY10/11 fueled by changing dietary requirements associated with elevated disposable incomes of Chinese consumers. Soybean oil imports is likely to recover MY11/12 soybean oil imports are expected to reach 1.7 MMT from the estimated 1.4 MMT in MY10/11. Both are lower than the previous estimate/forecast in GAIN CH11008 (1.9 MMT for MY10/11 and 2 MMT for MY11/12), reflecting relatively higher soybean stocks and a slower than anticipated recovery of imports from Argentine following the lifting of China?s import restrictions. Although China ?lifted? the ban on imports of Argentine soy oil in November 2010, the import volume from Argentine for the first half of MY10/11 remained low at 120,000 MT compared to 627,000 MT in the previous year. In early May, China?s Ministry of Commerce (MOFCOM) announced that China would import 500,000 MT of Argentine soybean oil. Total soybean oil imports for the first half of MY10/11 stood at 767,000 MT, with imports from the United States having surged to 323,000 MT, in response to the gap lift by the ban on argentine imports. Domestic soybean production switched to ?Non-GMO-high protein?? To stimulate domestic soybean production, China?s industry stakeholders are looking for new markets. A senior agriculture policy advisor suggested that China?s soybean industry may need to prioritize ?Non-GMO high protein soybean? as a strategy to revitalize domestic soybean production. According to this advisor, the government should focus on the following: establish a stable, reliable and safe soybean supply chain worldwide to meet the growing domestic demand (for soybean for crushing); define domestic soybean production strategy as ?Non-GMO, high protein and food use? based on the comparative advantages, specifically with policy aimed at supporting developing varieties characterized with ?Non-GMO high protein? and ?Non-GMO high protein and oil content?; increase the coverage of Non-GMO high protein varieties with policy support; provide guidance to food processing industry to produce value-added soybean products and exploit overseas markets; continue to support farmers by ?buying soybeans for reserve? to provide price support and ?improve the seed and other subsidy system?. Given increasing consumption of domestically produced Non-GMO soybeans for food use and a declining share of domestic soybeans for crushing, this suggestion would likely facilitate soybean imports (for crushing). Additionally, China began to subsidize agriculture investment overseas in 2011. An industry source reported that one of China?s largest state owned oilseed crushers finalized a deal with Brazil to invest $23 million in joint project to build a port facility in Brazil mainly aimed at enhancing the capacity in sourcing soybeans from Brazil. A joint agriculture research lab between China Academy of Agriculture Science (CAAS) and Brazil Academy of Agriculture Science was inaugurated in CAAS focus on research on genome resources, biotechnology, renewable energy etc. MY11/12 rapeseed production forecast up at 12.8 MMT MY11/12 rapeseed production is forecast at 12.9 MMT, unchanged from the estimated 12.8 MMT in MY10/11. The higher yield follows good weather conditions during rapeseed maturation and harvesting seasons in major-producing regions in MY11/12 which offset a drop in planted area to 7.2 MHa. In late May, CNGOIC adjusted MY11/12 overall rapeseed planted area to 7.2 MHa, down from 7.35 MHa in MY10/11, considering comparatively low returns for farmers in Anhui, Jiangsu, Henan and Guizhou Provinces, stable planted area in Hubei and an increase in Hunan Province. Post field survey in April, however, indicated that MY11/12 planted area in both Hubei and Hunan provinces is lower than the previous year. Low profits and high input costs (including labor) continue to hamper rapeseed area growth. MY11/12 rapeseed yield is higher than the previous year because of the favorable weather in April and May in major-producing regions, including the southwest region (Yunan and Guizhou Provinces) where the yield recovered following a drought in the previous year. The growth of MY11/12 crop is rated as "normal" overall with the exception of parts of Hubei and Anhui provinces that were affected by dry conditions during planting and by "cold rainy" weather in the early growing season. Rapeseed imports remain low and rapeseed oil imports increase China?s growing demand for rapeseed meal (a traditional cost effective protein source for the expanding aquaculture sector) and a growing crush industry are the major forces driving rapeseed imports. MY11/12 rapeseed imports are forecast at 1.6 MMT (down from the 1.9 MMT in GAIN 11008), but up from estimated imports of 1 MMT for MY10/11. Rapeseed imports fell significantly following China?s placement of a phytosanitory restriction on Canadian rapeseed in November 2009. Currently, Canadian-origin rapeseed can only be imported to China?s non-rapeseed producing regions, thus significantly restricting the import volume. Chinese crush industry leaders, whose profits are suffering from a 30% utilization rate, have called for the lifting of the ban. The large domestic rapeseed crushing capacity was estimated at 43 MMT in 2010, and another 3.6 MMT crushing capacity will be added in 2011. MY11/12 rapeseed oil imports are forecast to grow to 900,000 MT from the estimated 850,000 MT in MY10/11, both higher than the 600,000 MT and 700,000 MT (in GAIN CH11030), respectively. The forecast higher imports are expected to replenish low imports of rapeseed and meet the growing demand for rapeseed oil. MOA plans to increase rapeseed production According to CNGOIC, MOA has set a target in the ?12th Five Year Plan? to increase rapeseed production to 20.1MMT by 2015 on planted area of 9.73MHa (146MMu) and an average yield of 2,070 Kg/Ha (138Kg/Mu). Major measures include: boost planting area by exploiting the winter idle land, intensify agriculture technology extension services to increase yield/quality and productivity, and improve infrastructures and rapeseed-related agribusiness and cooperatives. Rapeseed oil reserve release and price Some Chinese industry leaders complained that the government?s release of approximately 1.2 MMT of rapeseed oil reserves since late 2010 has driven down the price of rapeseed oil. Traditionally, rapeseed oil prices are RMB200-400/MT higher than soybean oil prices, but currently the position is reversed. However, some leaders expressed confidence that lower cost rapeseed oil will spur rapeseed oil consumption, particularly in the traditional rapeseed-consumption regions. As for the farm gate price for the new crop, industry insiders estimate it should range from RMB4,600 to 4,800/MT. MY11/12 Cottonseed production up to 12 MMT Due to record high cotton prices last year, cottonseed production in MY 11/12 is expected to rise, forecast at 12 MMT up from 10.2 MMT in the previous year. MY 11/12 Peanut production forecast at 14.7 MMT MY11/12 peanut production is forecast at 14.7 MMT based on planted area of 4.5 MHa (unchanged from the previous year) and average yield. China?s National Statistics Bureau estimates that MY10/11 domestic peanut production will hit 15.6 MMT, up 900,000MT from the previous year, due to increased area and yield (mainly because of favorable weather conditions). In late-May, CNGOIC forecast MY11/12 peanut production up to 15.9 MMT (from the 15.6 MMT in MY10/11) based on a forecast high planted area of 4.7 MHa, compared to 4.55 MHa in MY10/11. Oilseeds PSD Tables Table 1. Soybeans Oilseed, Soybean China 2009/2010 2010/2011 2011/2012 Market Year Market Year Market Year Begin: Oct Begin: Oct Begin: Oct 2009 2010 2011 USDA SDA O w U fficia NePost O w USDA w fficia Ne Post Officia Ne Post l l l Area Planted 9,200 9,190 9,000 8,800 9,000 8,500 Area Harvested 9,190 9,190 8,800 8,800 8,700 8,500 Beginning Stocks 7,555 7,555 13,259 11,03 15,709 12,68 9 9 Production 14,980 14,98 15,200 15,20 14,800 14,45 0 0 0 MY Imports 50,338 50,33 54,500 54,50 58,000 58,00 8 0 0 MY Imp. from U.S. 22,450 22,56 27,000 26,00 25,000 25,00 8 0 0 MY Imp. from EU 0 0 0 0 0 0 Total Supply 72,873 72,87 82,959 80,73 88,509 85,13 3 9 9 MY Exports 184 184 200 200 300 400 MY Exp. to EU 20 20 20 22 30 30 Crush 48,830 51,00 56,100 57,00 61,500 61,50 0 0 0 Food Use Dom. Cons. 8,850 8,900 9,100 9,000 9,200 9,200 Feed Waste Dom. Cons. 1,750 1,750 1,850 1,850 1,800 1,800 Total Dom. Cons. 59,430 61,65 67,050 67,85 72,500 72,50 0 0 0 Ending Stocks 13,259 11,03 15,709 12,68 15,709 12,23 9 9 9 Total Distribution 72,873 72,87 82,959 80,73 88,509 85,13 3 9 9 CY Imports 54,785 50,00 56,000 55,00 58,000 57,50 0 0 0 CY Imp. from U.S. 23,589 23,00 27,000 26,50 25,000 25,00 0 0 0 CY Exports 163 200 450 250 500 300 CY Exp. to U.S. 20 20 30 30 50 50 TS=TD 0 0 0 Table 2. Rapeseed Oilseed, Rapeseed China 2009/2010 2010/2011 2011/2012 Market Year Market Year Market Year Begin: Oct Begin: Oct Begin: Oct 2009 2010 2011 USDA A O New fficia New USD Post O w USDA fficia Ne ficia Post Of Post l l l Area Planted 0 0 0 Area Harvested 7,278 7,278 7,200 7,300 7,000 7,200 Beginning Stocks 1,394 1,394 2,114 1,646 1,364 146 Production 13,657 13,65 12,600 12,80 12,800 12,80 7 0 0 MY Imports 2,177 2,177 1,400 1,000 1,400 1,600 MY Imp. from U.S. 0 0 0 0 0 0 MY Imp. from EU 0 0 0 0 0 0 Total Supply 17,228 17,22 16,114 15,44 15,564 14,54 8 6 6 MY Exports 0 0 0 0 0 0 MY Exp. to EU 0 0 0 0 0 0 Crush 14,564 15,00 14,200 14,70 13,700 13,94 0 0 6 Food Use Dom. Cons. 0 0 0 0 0 0 Feed Waste Dom. Cons. 550 582 550 600 500 600 Total Dom. Cons. 15,114 15,58 14,750 15,30 14,200 14,54 2 0 6 Ending Stocks 2,114 1,646 1,364 146 1,364 0 Total Distribution 17,228 17,22 16,114 15,44 15,564 14,64 8 6 6 CY Imports 1,600 1,600 1,750 1,200 2,200 1,600 CY Imp. from U.S. 0 0 0 0 0 0 CY Exports 0 0 0 0 0 0 CY Exp. to U.S. 0 0 0 0 0 0 TS=TD 0 0 0 Table 3. Peanuts Oilseed, Peanut China 2009/2010 2010/2011 2011/2012 Market Year Market Year Market Year Begin: Oct Begin: Oct Begin: May 2009 2010 2011 USDA USDA A O ew fficia NPost O New USD fficia O New fficia Post Post l l l Area Planted 4,400 4,400 4,450 4,450 4,450 4,500 Area Harvested 4,377 4,377 4,450 4,450 4,500 4,500 Beginning Stocks 0 0 0 0 0 0 Production 14,708 14,70 15,100 15,10 15,200 14,70 8 0 0 MY Imports 14 14 5 5 5 6 MY Imp. from U.S. 0 0 0 5 0 0 MY Imp. from EU 0 0 0 5 0 0 Total Supply 14,722 14,72 15,105 15,10 15,205 14,70 2 5 6 MY Exports 627 627 700 700 700 750 MY Exp. to EU 190 190 180 180 180 240 Crush 7,029 7,029 7,180 7,515 7,330 7,260 Food Use Dom. Cons. 6,092 6,092 6,275 6,200 6,225 6,015 Feed Waste Dom. Cons. 974 974 950 690 950 681 Total Dom. Cons. 14,095 14,09 14,405 14,40 14,505 13,95 5 5 6 Ending Stocks 0 0 0 0 0 0 Total Distribution 14,722 14,72 15,105 15,10 15,205 14,70 2 5 6 CY Imports 21 21 10 10 10 10 CY Imp. from U.S. 0 0 0 0 0 0 CY Exports 638 638 700 700 700 720 CY Exp. to U.S. 11 11 0 0 0 0 TS=TD 0 0 0 Table 4. Cottonseed Oilseed, Cottonseed China 2009/2010 2010/2011 2011/2012 Market Year Market Year Market Year Begin: Oct Begin: Oct Begin: Oct 2009 2010 2011 USDA SDA O New U fficia Post O ew USDA New fficia N Post Officia Post l l l Area Planted (Cotton) 5,200 5,500 5,200 5,200 5,200 5,450 Area Harvested (Cotton) 5,300 5,500 5,150 5,200 5,500 5,450 Seed to Lint Ratio 0 0 0 0 0 0 Beginning Stocks 0 0 0 0 0 0 Production 12,540 12,54 11,953 10,24 12,933 12,00 0 0 0 MY Imports 1 1 40 40 50 40 MY Imp. from U.S. 0 0 0 0 0 0 MY Imp. from EU 0 0 0 0 0 0 Total Supply 12,541 12,54 11,993 10,28 12,983 12,04 1 0 0 MY Exports 0 0 0 0 0 0 MY Exp. to EU 0 0 0 0 0 0 Crush 10,080 9,740 9,600 7,380 9,803 9,000 Food Use Dom. Cons. 0 0 0 0 0 0 Feed Waste Dom. Cons. 2,461 2,801 2,393 2,900 3,180 3,040 Total Dom. Cons. 12,541 12,54 11,993 10,28 12,983 12,04 1 0 0 Ending Stocks 0 0 0 0 0 0 Total Distribution 12,541 12,54 11,993 10,28 12,983 12,04 1 0 0 CY Imports 16 0 25 30 50 40 CY Imp. from U.S. 0 0 0 0 0 0 CY Exports 0 0 0 0 0 0 CY Exp. to U.S. 0 0 0 0 0 0 TS=TD 0 0 0 Oils PSD Tables Table 5. Soybean Oil Oil, Soybean China 2009/2010 2010/2011 2011/2012 Market Year Market Year Market Year Begin: Oct 2009 Begin: Oct 2010 Begin: Oct 2011 USDA New USDA New USDA New Official Post Official Post Official Post Crush 48,830 51,000 56,100 57,000 61,500 61,500 Extr. Rate, 999.9999 0. 0.1787 0. 0.1788 0. 0.1787 Beginning Stocks 477 477 205 777 178 977 Production 8,726 9,113 10,036 10,190 11,009 10,990 MY Imports 1,514 1,514 1,750 1,400 1,850 1,700 MY Imp. from U.S. 99 99 350 350 100 350 MY Imp. from EU 0 0 0 0 0 0 Total Supply 10,717 11,104 11,991 12,367 13,037 13,667 MY Exports 77 77 40 70 40 90 MY Exp. to EU 0 0 0 0 0 0 Industrial Dom. Cons. 0 0 0 0 0 0 Food Use Dom. Cons. 10,435 10,250 11,773 11,320 12,815 12,500 Feed Waste Dom. 0 0 0 0 Cons. Total Dom. Cons. 10,435 10,250 11,773 11,320 12,815 12,500 Ending Stocks 205 777 178 977 182 1,077 Total Distribution 10,717 11,104 11,991 12,367 13,037 13,667 CY Imports 1,341 1,341 1,750 1,400 2,000 170 CY Imp. from U.S. 282 282 320 350 100 200 CY Exports 59 59 70 60 70 65 CY Exp. to U.S. 0 0 0 0 0 0 TS=TD 0 0 0 Table 6. Rapeseed Oil Oil, Rapeseed China 2009/2010 2010/2011 2011/2012 Market Year Market Year Market Year Begin: Oct Begin: Oct Begin: Oct 2009 2010 2011 USDA USDA O New New USDA fficia Post Officia Officia New Post Post l l l Crush 14,564 15,00 14,200 14,70 13,700 14,04 0 0 6 Extr. Rate, 999.9999 0. 0.356 0. 0.356 0. 0.356 Beginning Stocks 291 291 600 1,178 406 1,553 Production 5,170 5,340 5,041 5,233 4,864 4,960 MY Imports 785 785 850 850 900 900 MY Imp. from U.S. 0 0 0 0 0 0 MY Imp. from EU 0 0 0 0 0 0 Total Supply 6,246 6,416 6,491 7,261 6,170 7,413 MY Exports 5 7 5 8 5 7 MY Exp. to EU 0 0 2 3 2 2 Industrial Dom. Cons. 0 0 0 0 0 0 Food Use Dom. Cons. 5,641 5,231 6,080 5,700 5,825 5,760 Feed Waste Dom. Cons. 0 0 0 0 0 0 Total Dom. Cons. 5,641 5,231 6,080 5,700 5,825 5,760 Ending Stocks 600 1,178 406 1,553 340 1,646 Total Distribution 6,246 6,416 6,491 7,261 6,170 7,413 CY Imports 985 800 800 850 850 890 CY Imp. from U.S. 0 0 0 0 0 0 CY Exports 4 4 4 4 4 4 CY Exp. to U.S. 0 0 0 0 0 0 TS=TD 0 0 0
Posted: 14 June 2011, last updated 15 June 2011

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