Soybean prices hit by imports, 2015 soybean planting area may shrink
In recent years, China's soybean market has been severely hit by imports. In 2014, China's total soybean imports reached 71.4 million tons, breaking through 70 million tons for the first time. In the same period, domestic soybean production was only 12.2 million tons, and import prices were even lower than domestic soybean prices, leaving domestic soybeans almost no room to survive.
Soybean prices hit by imports, 2015 soybean planting area may shrink
According to a report by China National Radio's "Sannong China", Mei Yunhuan of Hubei Village, Yanggang Town, Hulin City, Heilongjiang Province, has planted several hundred mu of soybeans. When the beans had just been harvested, the market was still acceptable, so he quickly sold them off. These days, the soybeans in the village are all being sold at a loss, which makes him count himself lucky.
Mei Yunhuan: “It's no good lately. Soybeans can't be planted anymore. The cost isn't even covered now with the price drop. Nobody wants them. I'd like to plant soybeans, but the key thing is the subsidies have only been reported upward, and whether they can be paid out, who knows what's going on. If the preferential policies are still good, then I'll keep planting soybeans. If not, then there's no other way. Plant corn, I guess.”
Since last year, the domestic soybean market as a whole has shown a moderate downward trend. As of early January, the national average soybean price was 3,837 yuan per ton, down 2.39% month-on-month and down 13.13% year-on-year. Yang Jing, an analyst at the Henan Zhengzhou Grain Wholesale Market, pointed out that in recent times, both imported and domestic soybeans have seen relatively large declines.
Yang Jing: “In January, the duty-paid cost of imported soybeans arriving at port was 3,400 yuan/ton, down 130 yuan/ton month-on-month and down 800-900 yuan/ton from the same period in 2014. Among domestic soybeans, the purchase price of food-grade beans in the Heilongjiang region was 4,100-4,240 yuan/ton, down 200-260 yuan/ton month-on-month and down 400-500 yuan/ton from the same period in 2014.”
In recent years, China's soybean planting area and production have shown a trend of decreasing year by year. However, their sales prices have not risen due to the reduced production; instead, they have remained lukewarm. As is well known, the raw soybeans and crude oil for domestic soybean oil in China are mainly imported, and domestic prices are dominated by the international market. According to data released by the General Administration of Customs, China's soybean imports in 2014 were 71.4 million tons, up 12.7% year-on-year. Liu Jingliang, an analyst at the Beijing Yuquan Road Grain and Oil Market, pointed out that low-priced imported soybeans have severely hit the domestic soybean market.
Liu Jingliang: “First, soybeans had a bumper harvest, with increased volume and falling prices. Last year, the world's three major soybean-producing and exporting countries, Brazil, Argentina and the United States, all achieved bumper harvests. The comprehensive bumper harvest of soybeans led to loose global soybean supply and falling prices. Second, imports increased and pressure intensified. After large quantities of low-priced foreign soybeans entered the domestic market, they further suppressed the sales space for domestic soybeans. Looking at Northeast China, the main domestic soybean-producing region, most oil mills switched to imported beans and stopped purchasing domestic soybeans, which in turn led to weak sales of domestic soybeans.”
Last year, China first implemented a soybean target price pilot program in Northeast China and Inner Mongolia, canceling the temporary soybean purchase and storage policy, with the soybean target price at 4,800 yuan per ton, equivalent to 2.40 yuan per jin. The introduction of the target policy provided some income guarantee for soybean farmers to a certain extent. However, compared with the returns from growing rice, corn and wheat, it still did not have an advantage. Yang Jing said that factors driving soybean prices further down still remain, and the soybean planting area may shrink further.
Yang Jing: “Because farmers are reluctant to sell, the current surplus domestic soybean inventory held by farmers is generally relatively large, increasing downward pressure on prices later. It is expected that around the time of spring sowing, a peak in farmers selling soybeans will appear, and the sharp increase in supply pressure will cause spot prices to fluctuate downward. Because the soybean target price subsidies allocated by the state will not be paid into farmers' hands until May 2015, by then farmers' spring sowing will have basically ended. In addition, after new soybeans came onto the market in 2014, the purchase and sales prices of domestic soybeans were significantly lower than in previous years. It is expected that farmers' enthusiasm for planting soybeans will be further dampened, and the domestic soybean planting area in 2015 will shrink further.”
At present, in terms of price, domestic soybeans find it very difficult to compete with international soybeans, which makes it necessary to make full use of the advantages of domestic soybeans, such as their high protein content, to open up markets.
⟦NL> Based on the current situation of difficult sales and low prices for domestic soybeans, Liu Jingliang, an analyst at the Beijing Yuquan Road Grain and Oil Market, suggested: “On the one hand, it is suggested that government departments increase the advantages of domestic soybeans and carry out industrial upgrading, and find another way to consume domestic soybeans and enhance their value. On the other hand, it is suggested that growers appropriately adjust their planting area, and at the same time establish cooperative organizations in one village or among several large households, relying on the quality advantages of domestic soybeans to establish long-term and stable cooperative relationships with domestic and foreign production enterprises. In this way, with the bottom support of the target price policy and cooperative orders promoting stable sales, returns will improve.”
Yang Jing, an analyst at the Henan Zhengzhou Grain Wholesale Market, suggested that in the short term soybeans could be appropriately sold off, and in the long term the soybean planting area could be appropriately adjusted.
Yang Jing: “In terms of operations, it is suggested that farmers appropriately sell off domestic soybeans before the Spring Festival, and downstream enterprises purchase as needed and maintain low inventories. Now it appears that returns are still quite different from corn. Although the state has raised the target price, compared with corn, the planting returns for soybeans are still relatively low. It is suggested that growers appropriately reduce the soybean planting area.”