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The nation has been pursuing multiple ways to reduce its
consumption of feed ingredient soymeal, made from soybeans, amid
a festering trade war with the United States, its No.2 supplier
of beans.
China, which typically buys about two thirds of globally traded
soybeans to help feed its huge livestock herd, has been taking
steps such as turning to alternative meals and reducing protein
levels in feed.
China's Feed Industry Association on Friday approved new
standards for feed for pigs and chickens, lowering the protein
levels in pig feed by 1.5 percentage points and those for
chickens by one percentage point, the agriculture ministry said
in a statement that day.
The standards are only guidelines and the ministry did not say
when they would take effect, with traders saying that prices
would continue to be the key focus for soymeal consumers.
"The new standards are not enforceable (as they are based on
guidelines)," said a soybean trader in China, declining to be
identified due to the sensitivity of the matter.
Another trader, based in Beijing, said that most big feed mills
were already using less soymeal than last year because prices
had risen versus 2017. The most actively traded soymeal contract
on the Dalian Commodity Exchange <DSMcv1> has climbed 20 percent
since the start of the year to record levels of more than 3,300
yuan ($474.37) per ton.
"They (mills) were also able to find substitutes. Soymeal
consumption is based on the soymeal price and the price of
substitutes," he said.
Those comments came even as the government said on Friday that
the new standards would cut China's annual consumption of
soybeans by 14 million tonnes, marking a drop of about 13
percent from the last crop year in the world's top buyer of the
oilseed.
The ministry also said that China's overall yearly consumption
of soymeal would fall by 11 million tonnes. The country used 71
million tonnes of soymeal to make animal feed in the 2017-18
crop year.
The agriculture ministry said China depended on imports for
nearly 80 percent of its protein raw materials, and that this
had caused a "bottleneck" to development of the country's feed
and livestock sectors.
Lowering protein levels in feed would also reduce the negative
impact on the environment, it said.
The National Development & Reform Commission (NDRC) - the state
economic planner - in July discussed ways to switch up pigs'
diets with major feedmakers including New Hope Group, Dabeinong,
CP Group and Hefeng Group.
TURNING TO BRAZIL
China is entering what is typically its top buying season for
U.S. soybeans. However, only a handful of U.S. cargoes have
arrived in the country in recent months and it is expected to
largely rely on beans from top supplier Brazil.
Its soybean imports are set to drop by a quarter in the last
three months of 2018, their biggest fall in at least 12 years as
buyers curb purchases.
Beijing imposed 25 percent tariffs on $34 billion worth of U.S.
products including soybeans on July 6, in retaliation for U.S.
tariffs on Chinese goods of the same amount.
Soymeal futures on the Dalian Commodity Exchange for January
delivery <DSMF9> fell more than 1 percent on Monday to 3,349
yuan per ton.
And not everybody agreed that the impact of the new guidelines
would be minimal.
"This will have a very important impact on industry, but it's
still not clear how long it will take to be fully introduced,"
said Yang Linqin, an analyst at Cofco Futures.
(Reporting by Chen Aizhu, Li Pei and Dominique Patton; Editing
by Joseph Radford)
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