CHINA- Recovering demand for protein meals as feed production expands in China is the primary driver for the growth in oilseed demand, according to a report from the Foreign Agricultural Service (FAS) of the US Department of Agriculture (USDA). 

The report estimates that the total oilseeds crush for MY 23/24 at 135 million metric tons (MMT) from the previous estimate of 134 MMT. This is also an increase from the estimated 132.9 MMT in MY 22/23. 

Despite experiencing low to negative margins in the swine and poultry sectors during parts of MY 22/23, both sectors’ production indicates an upward trend in feed demand; propelling the utilization of oilseed meal, particularly soybean meal (SBM). 

Additionally, in spite of an uptick in prices from June to August, SBM consumption, which accounted for around 73.5% of the total protein meals used in MY 22/23, appears to be increasing to meet the growing feed production.

Moreover, a moderate resurgence in the demand for vegetable oil and increased usage of soybeans for food purposes are contributing to greater demand for oilseeds.

Post raised its projection for soybean crush in MY 23/24 to 96 MMT from the previous estimate of 94 MMT, reflecting a moderate expansion in demand for soybean products, ample soybean supply, and relatively low SBM prices compared to recent highs.

On the other hand, the forecast rapeseed crush in MY 23/24 is 19 MMT, unchanged from the previous report, and the estimate for MY 22/23. Demand for rapeseed products increased rapidly in MY 22/23 due to the end of zero-COVID restrictions in late 2022, which led to a spike in demand from the food service sector. 

In addition to the increased demand for rapeseed oil, feed sector demand for rapeseed meal for aquaculture feed boosted overall consumption. Despite a forecast decline in world rapeseed production, Post expects a slight increase in domestic production and relatively high carry-in stocks to sustain consumption in MY 23/24.

Demand drives imports up 

The FAS report highlights a significant surge in soybean imports, hitting a record of 100.86 MMT in MY 22/23. This boost, an impressive 9.3 MMT year-over-year increase, mirrors the revived demand for soybean meal (SBM) in the swine and poultry sectors. 

The spike is also fueled by a rise in the need for vegetable oil within the food service industry. This uptick showcases China’s commitment to securing soybeans, especially from Brazil, its primary supplier.

To sustain this trend, China aims to support the demand for Brazilian soybeans, which experienced a record harvest in 2023, aligning with China’s strategy to diversify soybean imports.

Projections for MY 23/24 foresee soybean imports staying at 100 MMT, slightly up from the previous estimate of 98.5 MMT. This anticipation rests on expectations of sufficient supplies, a modest uptick in SBM demand in animal production, and an increased need for vegetable oil in the food sector.

Regarding rapeseed imports, the forecast for MY 23/24 remains stable at MMT, a significant drop from the record 5.3 MMT in MY 22/23. 

Factors attributing to the prior surge in rapeseed imports include improved trade relations with Canada, which contributed 93.5 percent of the imports, and heightened demand from the aquaculture sector, showing growth in both freshwater and marine segments.

However, expectations suggest limitations in import growth due to increased domestic soybean production and state-reserve soybean sales.