China’s soya imports could fall for the first time in a decade in the 2015/16 crop year due to a slowdown in animal feed demand at the world’s top soyabean buyer, a senior trader with commodity giant Cargill said on Thursday. Imports would also be affected by the depreciation of China’s currency, which has increased costs, Frank Zhou, soya trading general manager with Cargill Investment (China) Ltd, told an industry conference.
“China’s demand has approached its upside limit in the short term and there is limited room for further growth in the future, but may have a risk of decrease,” Zhou said. China’s urbanisation drive had slowed, while hog breeders may take longer to rebuild herds after recent losses.
“They are not going to increase new investment. Recovery of hog restocking may take a long time or possibly will last until March or April next year,” he said. Zhou did not give any estimate for 2015/16 shipments. China imports more than 60 percent of globally traded soyabeans.
The China National Grain and Oils Information Centre (CNGOIC), an official think-tank, has forecast a 1 million tonne rise in China’s imports of the oilseed to 78 million tonnes in the year to September 2016. That compares with a 7 million-tonne increase for the current year and 10 million tonnes in 2013/14. Other traders told the conference imports would be flat at 77 million tonnes in 2015/16.
Zhou said the depreciation of the renminbi has increased costs for buyers and is expected to further deter financial buyers, who use the shipments as collateral to borrow money. Imports by financial buyers accounted for 25 percent of the country’s annual soya imports in 2013/14, but fell to 6 percent in 2014/15 and were expected to fall further in the fourth quarter of calendar 2015, he said.
Future imports would be driven more by crushing margins. Zhou said cheap soyameal has been replacing other meals, including rapeseed and cottonseed meal, but replacement has nearly reached its ceiling. Soya prices, meanwhile, would remain under pressure due to expanded acreage in South America.