USDA Outlook: Global soybean imports projected to rise 2.3% year-over-year to 90.8 million tons in 2011/2012 as import growth slowed by tightening supplies, high prices
February 13, 2012
– The following article is excerpted from the February Oil Crops Outlook published by the Economic Research Service of the USDA.
Moderating Soybean Demand Seen for China
Tightening supplies and higher prices for soybeans are likely to slow the growth of global imports. World soybean imports in 2011/12 is seen rising to 90.8 million, which would be up from 88.8 million in 2010/11. However, compared to last month, the trade forecast is reduced 2.2 million tons. China—which accounts for approximately 60 percent of world soybean trade— figures prominently in this market development.
For China, October 2011-January 2012 soybean imports totaled 19.5 million tons—down slightly from 19.8 million a year earlier. Processing margins in China have been pressured by sluggish soybean meal demand and industry overcapacity. The growth in domestic feed demand has been interrupted by a low output of hogs. Producers have been forced to reduce herds for months by outbreaks of disease among the animals. The resulting supply deficit for pork (the country’s most popularly consumed meat) has been filled by imports. As soon as better control is gained over these animal diseases, rising feed demand this year should boost the profitability of crushing and gradually quicken the pace of soybean imports. At the same time, U.S. shipments could regain a modestly higher trade share of China’s soybean imports. Given the recent strength in prices, however, it is unlikely that demand by China’s crushers would expand strongly enough to reach USDA’s prior forecast of this year’s imports. Soybean imports by China in 2011/12 were forecast 1 million tons lower this month to 55.5 million.
Demand for the Canadian Canola Crop Is Growing Strongly
Last year’s record-large canola (rapeseed) harvest in Canada is disappearing rapidly. The evidence is that—despite a year-to-year increase in canola supplies of nearly 800,000 tons—the country’s stocks on December 31 were 140,000 tons lower than a year earlier. This rapid decline in canola stocks can be primarily attributed to robust export demand. Exports of canola from Canada are expected at a record 8 million tons in 2011/12—up 800,000 tons from last month’s forecast and last year’s total of 7.21 million.
According to the Canadian Grain Commission, exports of canola were 4.7 million tons through January 29—more than 1 million tons ahead of last year’s pace. Shipments to China accounted for a majority of the increase. After declining last year, rapeseed crushing in China is expanding again. China’s 2011/12 rapeseed imports were forecast 200,000 tons higher this month to 1.4 million.
Domestic use of canola is strong, too, as Canadian processors are now better equipped to use the plant capacity that they added several years ago. For August-December 2011, the cumulative canola crush was 2.9 million tons compared to the previous year’s record pace of 2.6 million. This month, USDA raised its 2011/12 forecast for the canola crush in Canada by 100,000 tons to 6.65 million. Thus, even with Canada’s record supply of canola, brisk use could slash the season- ending stocks to an 8-year low of 1.1 million tons.
To a large extent, the additional supplies of canola products generated by Canadian crushers are being absorbed by the U.S. import market. An expansion of U.S. canola oil imports is forecast to a record 1.5 million metric tons this year—more than twice the volume just 5 years ago. These imports from Canada are helping to offset lower U.S. production of soybean oil and sunflowerseed oil. Also, U.S. canola meal imports could climb to a record 2.45 million metric tons in 2011/12 from 2.04 million in 2010/11.
China may also be importing more Canadian meal, too, after it recently banned rapeseed meal imports from India over a phytosanitary issue. These additional supplies, combined with a higher output of domestically processed rapeseed meal, could offset a moderate lowering of the country’s soybean meal supply.