China’s robust demand for oilseeds continues to outpace growth in domestic production

Date:03-23-2017

Overall, the growth in China’s domestic oilseed production continues to lag behind the growth in domestic demand. As a result of the MY14/15 direct subsidy payment to soybean farmers based on a stable target price, and the MY15/16 change in government policy to reduce the level of support to corn producers, China’s total planted area for all oilseed crops is forecast to rise by 1.4 percent to 23.3 million hectares (MHa). Total oilseed production is forecast to rise to 56.25 MMT in MY17/18, up from the estimated 55.3 MMT in MY16/17 but still lower than the total in MY14/15.

The higher production forecast reflects an expected rise in soybeans, peanuts, and cottonseed production. This combined increase of about 1.3 MMT will likely be offset by a forecast 0.3 MMT drop in rapeseed production. Inadequate production conditions – from economies of scale, agronomic practices, technology resources and input quality – continue to limit the potential gains in oilseed yields. Meanwhile, Chinese consumption of meat, seafood, vegetable oils, and soybeans for food-processing continues its unrelenting growth, fueled by rising affluence, urbanization, and expanding consumer preferences. In response to these dietary demands, China must complement its domestic oilseed resources with imports, primarily from Brazil, the United States, Argentina and Canada.

China’s soybean area is expected to increase moderately in MY17/18 in response to the government’s policy change to limit grain crops. Lower corn earnings in major soybean-producing provinces are likely to encourage some farmers to plant soybeans in MY17/18.

Driven by steady positive earnings received in recent years, the forecast for China’s peanut production is slightly up for MY17/18. Cottonseed production is forecast to recover in MY17/18 in response to higher cotton prices and higher profits in MY16/17. Post forecast for MY17/18 cotton acreage is 3.3 percent higher than the previous year. Conversely, the MY16/17 rapeseed planting area and production are both forecast to fall 3 percent. This is in response to lower farm earnings since the government ended its price support policy for rapeseed in MY15/16.


Oilseed Development Plan For 2020

On August 15, 2016, China’s National Development and Reform Commission (NDRC), in collaboration with China’s Ministry of Agriculture (MOA) and the State Forestry Administration published the “National Oilseed Development Plan (2016 to 2020).” The plan sets a target for total oilseed production at 59.8 MMT by 2020 from the 45.4 MMT in 2014 (note: oilseeds include rapeseed, peanuts, soybean and camellia). This target is to be achieved through a planted area expansion with an additional area of 4.16 MHa and yield gains through technological advancement.