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Rabobank commentary: China’s soybean import outlook through to 2030 and the impact on Australian growers

A new Rabobank China report, China’s Soybean Import Outlook Through 2030: Is the Peak Already in the Rearview Mirror? says China is the world’s largest soybean importer, accounting for over 60 per cent of global trade, with soybean imports mainly driven by crushing for livestock-feed production.

The bank expects Chinese livestock-feed consumption will rise from 450 million tonnes in 2021 to 486 million tonnes in 2025 and 523 million tonnes in 2030, driven by continued growth in animal protein production.

Rabobank Australia agricultural analyst Dennis Voznesenski said the Chinese government is launching a soymeal reduction campaign aimed at lowering dependence on imported soybeans to ensure food security.

“In 2021 the Chinese ministry for agriculture and rural affairs issued guidelines to promote the reduction of soymeal use without consideration for animal growth rates and productivity,” he said.

Mr Voznesenski said the government hopes to reduce the inclusion ratio of soymeal in feed from 15.3 per cent in 2021 to 12 per cent by 2030.

“To further bolster food security, according to China’s 14th five-year plan, the Chinese government set a target to increase domestic soybean production to 23 million tonnes by 2025 – compared to 19.5 million tonnes in 2022 due to an increase in soybean acreage. An extra 3.5 million tonnes of domestically grown soybeans will be helpful but unlikely to fill the void of reducing soybean meal consumption from almost 70 million tonnes towards the low 60 million tonnes mark.”

Mr Voznesenski said “to fill the void created by reducing soymeal use and increased overall feed demand by 2030, Chinese feed mills will need to seek alternative protein sources. Traditional substitutes include rapeseed meal, cottonseed meal, peanut meal and sunflower meal”.

“The possibility of gradually increasing canola demand from China by 2030 comes at the same time as Canada looks to finish the construction of 3.6 million tonnes of domestic canola crushing capacity by early 2024. The consequence is likely a considerable decrease in Canadian canola export availability and more export market share for Australia.

“Furthermore, Europe, accounting for approximately 90 per cent of Australia’s canola export market, is looking to phase out palm oil as a biodiesel feedstock by 2030, again increasing demand for Australian canola. In 2022, palm oil accounted for almost 40 per cent of feedstock used in Europe for biodiesel production. In order to continue producing biodiesel, alternative inputs need to be sourced, from used cooking oil to more canola. All three factors act as a positive for Australian canola demand,” he said. 

The Rabobank analyst said markets should watch, however, a recent announcement by the German environment minister that a proposal will be sent to German cabinet to remove crops as a feedstock from biodiesel all together. “Between 2017 and 2021, approximately 30 per cent of Australian canola was exported to Germany and a loss of the market would likely mean a reduced local price over the longer term. While the proposal is by no means guaranteed to pass into law, it is definitely important to watch,” he said.

 

Rabobank Australia & New Zealand Group is a part of the international Rabobank Group, the world’s leading specialist in food and agribusiness banking. Rabobank has more than 120 years’ experience providing customised banking and finance solutions to businesses involved in all aspects of food and agribusiness. Rabobank is structured as a cooperative and operates in 38 countries, servicing the needs of approximately 8.4 million clients worldwide through a network of more than 1000 offices and branches. Rabobank Australia & New Zealand Group is one of Australasia’s leading agricultural lenders and a significant provider of business and corporate banking and financial services to the region’s food and agribusiness sector. The bank has 90 branches throughout Australia and New Zealand.