China’s Hog Industry Expansion Resulting in Record Soybean Imports

On August 10, The China National Grain and Oils Information Center (CNGOIC) raised its forecast for China’s soybean imports this year to a record 76 million tons - an increase of 5.3 million tons, or 8% over the CNGOIC’s previous May soybean import estimate of 73 million tons for 2014/15.

The CNGOIC is attributing this sizeable increase for China’s soybean imports to a growing demand for the feed ingredient, soybean meal fueled by the expansion of the country’s hog industry.

China’s monthly soybean imports for July were a record 9.5 million tons – 17.5% over June’s imports and a 27% year on year increase, according to Chinese customs data.

Data on inflation also indicated pork prices in the country are up by 16.7% year on year creating positive profit margins for hog producers of between 400 and 800 yuan per head in the week to July 24, and driving producers to finish hogs at their highest level since 2013.

The long-term growth in Chinese demand for pork is expected to be 3.3% per year for the next decade, driving a continued demand for feed. "Protein meal demand continues to be driven by growing animal producing capacity, scale animal farming and use of industry feed," said the U.S. Department of Agriculture bureau in Beijing.

Although there is a reported rise in interest from China in U.S. soybeans, the initial focus is being aimed at Brazil, where the depreciation of the country’s currency has brought the value of the real to a 12-year low against the dollar ,making the country’s exports increasingly attractive.

Brazil’s soybean exports for the month of July reached 8.4 million tons, and for the last quarter totaled a record 28 million tons, of which, China was the buyer of 21 million tons.

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