Chinese Demand for SBM Will Increase Despite Lingering Food Safety Concerns

By - Thursday, May 23, 2013

USSEC conducted a soy and feed roundtable in Shanghai.  At this time, the Chinese livestock and feed industries are facing increasing market challenges wrought by human infection of the H7N9 avian influenza (AI) virus and the disposal of dead pigs into the river system in the Yangtze River delta region.  A total of 55 participants from soybean crushing and trading companies, feed mills, and livestock production companies attended this event to discuss the current soy and feed market situation.

The South American soybean season began with many delivery delays due to severe port congestion in Brazil, causing a shortage to China’s soybean supply.  This situation drove prices higher, which in turn was tempered by food safety issues associated with the pig carcasses in the river system coupled with human infection of the AI virus in the East China provinces.  Causes of the disease are still unknown; warnings have been given, nevertheless, to the public to stay away from live birds.  Consumption of pork and poultry products has fallen drastically in the Yangtze River Delta region.

USSEC China Country Director Zhang Xiaoping, together with invited speakers from JC Intelligence, Cargill and Wells Fargo, discussed the global soybean supply along with demand and trade facilitation.  The roundtable proved to be a valuable platform for the soy value chain to meet and share information at this critical time for market direction.  USSEC Marketing Manager Claudia Chong, AU Technical Director Richard Han, Aquaculture Program Manager Jim Zhang and other USSEC staff attended the event.  Roundtable participants reported that both feed and soybean meal sales were down 30% in March as compared to the same period last year.  Market analysts, however, have a favorable view of the future market given the steadiness of soy planting acreage and a favorable weather outlook in the U. S, while China’s poultry production should recover from low inventory numbers in the next one to two months.  Participants predicted an increase of 15-20% in aquaculture feed to produce more fish and other aquatic products, given the current situation.

Mr. Zhang Xiaoping, USSEC China Country Director, and guest speakers Mr. Zhou of Cargill China (right at the head table) and Ms. Luo (center at the head table) are in the Q&A session