Worries that the world’s top soybean consumer may purchase less in the future and that the global demand for beans is slowing were eased on October 14 when China purchased $2.1 billion of U.S. Soy during a seminar on trade promotion between the U.S. and China in Des Moines. Sixteen contracts totaled nearly 5.1 million metric tons (MMT) of U.S. Soy.
Buyers and industry analysts say the contract signing ceremony, hosted by USSEC, is a sign of good things to come.
Less than two months ago, China purchased 146 million bushels of U.S. soybeans worth $1.8 billion during the U.S. Soy Global Trade Exchange in Indianapolis.
While the meteoric rise in Chinese soybean consumption is expected to slow, government officials and buyers said demand remains strong.
Shengli Si, chairman of the board of Henan Cereals, Oil & Foodstuffs Import and Export Group Corp. of Zheng Zhou, China said the days of double-digit percentage point increases of soybean imports are likely done. He expects 1 to 2 percent increases in the coming years.
“The government doesn’t plan to compete with imported soybeans,” Si said. “There’s room for soybean processing to grow.”
China buys more than 60 percent of the soybeans exported worldwide.
The U.S. accounts for about one-third of China’s soybean imports. That number is expected to increase as U.S. soybean exports are projected to hit an all-time high this marketing year, according to the U.S. Department of Agriculture.
China almost exclusively buys whole beans that are crushed for livestock feed. The nation boasts the largest swine herd in the world.
The country recently announced a five-year urbanization plan to move 100 million of its 1.4 billion citizens from rural areas to cities and lift them out of poverty, which is likely to lead to better protein-based diets.
Xu Jie, a trader for Shandong Bohi Industry Co., said U.S. farmers can expect a steady increase of soybean purchases from China as a result of the policy. He signed contracts to purchase 900,000 metric tons of U.S. soybeans at the ceremony.
“There’s no worry about Chinese demand about soybeans,” said Mr. Jie. “We see an increase in demand of two to three percent a year. That’s very good.”
USSEC consultant and economist John Baize provided a global soybean market and trade outlook to about 100 Chinese and U.S. industry and government officials who attended the seminar and signing ceremony.
As global population increases and incomes and the middle class grow, more and more people will want high-protein, meat-based diets, Mr. Baize explained.
Based on past trends, he said an additional 80 million metric tons of soybeans will be needed in the next 10 years to meet worldwide demand.
“As the demand for animal protein drives the demand for meal, there’s no greater demand than in China,” Mr. Baize stated.
He said India is set to change from an exporter to net importer of soybeans and Southeast Asia is a steady growth market.
USSEC director John Heisdorffer emphasized, “Soybeans will definitely be a major contributor to farmer incomes in the future.”