USDA Outlook: Global soybean imports forecast to rise 0.5% year-over-year to 89.3 million tons in 2011/2012, up 1.5 million tons from previous estimate
March 12, 2012
– The following article is excerpted from the March Oil Crops Outlook published by the Economic Research Service of the USDA.
Dimmer Income Growth for Soybean-importing Countries Likely To Slow Trade
International trade in soybeans may fade this year as rising costs and weaker outlooks for major economies of the world could ration use. Global soybean imports for 2011/12 are forecast 1.5 million tons lower this month to 89.3 million and only 0.5 percent more than last year.
In China, official projections signal more moderate economic growth this year at 7.5 percent compared to 9.2 percent in 2011 and 10.4 percent in 2010. The forecast growth rate would be the country’s lowest since 1990. Fewer new jobs would be available in China and gains in consumer income would slow. Particularly for a developing economy, that can mean less rapid growth in meat consumption and curtailment of demand for animal feed, including soybean meal.
China’s official trade data for October 2011-January 2012 indicated a 1-percent decline in soybean imports from a year earlier. The soybean import forecast for the full year is lowered 500,000 tons this month to 55 million but still expected to expand from 2010/11. Realizing the revised forecast would still take a 9-percent year-over-year increase in imports for February- September 2012.
Also helping to substitute for soybeans in China is a sharp rebound in imports of more competitively price rapeseed, which were forecast up 100,000 tons this month to 1.5 million. Since 2009, rapeseed imports from Canada were restricted to regions that did not grow rapeseed to prevent introduction of a fungal disease. Recently, Government officials have approved more crushing plants that can use these supplies. Similarly, the rising rapeseed trade figures into a lowered import forecast for soybean oil. Through January, cumulative imports of soybean oil by China were down by one-third from last year and leading to a lower 2011/12 trade forecast this month by 200,000 tons to 1.2 million.
One factor contributing to China’s slowing economy is a slumping of overall trade with its top trading partners. This includes the European Union countries, where 6 of the 17 countries that use the euro are already in a recession and others are perilously close. EU-27 imports of soybeans are forecast to decline to 11 million tons from last month’s forecast of 11.5 million and 12.5 million in 2010/11.
Several other major importing countries this year have been importing fewer soybeans, too. This month, USDA lowered forecasts of soybean trade for Japan, Taiwan, South Korea, and Indonesia. Excluding Indonesia, lower soybean meal consumption in each country is expected to reduce the crush demand for soybeans. In South Korea, last year’s outbreak of foot-and-mouth disease forced a culling of the country’s swine herd by one-third. This year, feed demand by South Korea’s hog sector is recovering but the pace has not been as fast as initially anticipated because of a shortage of breeding animals.
India’s Smaller Rapeseed Harvest Boosts Demand for Vegetable Oil Imports
Rapeseed area in India for 2011/12 is estimated 300,000 hectares lower this month to 6.7 million. The area declined from 7.25 million hectares last year as farmers in northern India responded to more favorable expected returns for wheat. Dryness during the October-November sowing period also deterred planting. Rapeseed yields in India do not fluctuate that much as nearly three- fourths of the area is irrigated. Reservoir levels were good following last summer’s above- average monsoon rains. With lower rapeseed area in India, the 2011/12 crop is seen declining 500,000 tons from last month’s forecast to 6.5 million and the 2010/11 harvest of 7.1 million. By early March, supplies from the new-crop harvest were starting to accelerate.
Domestic processors will use up the new rapeseed crop over the next several months, so the oil they produce will temporarily curb the ever-growing expansion of India’s vegetable oil imports. But this year’s smaller harvest means that the seasonal upswing in vegetable oil imports can start sooner. In 2011/12, Indian imports of all vegetable oil are forecast expanding to 9.1 million tons from 8.6 million in 2010/11. The imports will be predominantly palm oil at 7.25 million tons, followed by sunflowerseed oil and soybean oil at 840,000 tons and 800,000 tons, respectively.