China to import more rapeseed, rapemeal if tariff hits: CNGOIC

China will increase imports of rapeseed and rapemeal to compensate for the shortfall of 20 million mt in soybeans if China slaps taxes on US soybeans, the China National Grain & Oil Information Centre said Thursday.

In its weekly report, the centre said Chinese feed producers would lower soymeal content in feed, while crushers would increase crush rates using goverment reserves of soybeans, the centre said.

A 1% reduction of soybean meal content in feed would result in a 3.5 million mt reduction in domestic meal consumption, equivalent to 4.5 million mt of soybeans, the CNGOIC calculated.

China has an estimated reserve stock of 6.5 million mt of soymeal and reserve of 26.2 million mt of soybeans, data by the Chinese agricultural ministry shows.

“If China increase 25% tariff on US soybean import, China will shift all soybean import to non-US regions,” CNGOIC said, adding that China will shift its reliance to other major producers in South America.

However, even if China moves all its purchases to South America and able to pick up all the 80 million mt estimated for the soybean export market for 2017/18, there will still be a minimum deficit of 15 million mt, based on Agricensus calculations using CASDE numbers.

The centre estimates the deficit to be even higher at 20 million mt.

Longer-term, the potential tax will stimulate soybean plantings in South America and the Black Sea region to supply the Chinese market, the CNGOIC said.

Weekly market update

China soymeal stocks available to the industry currently stand at 826,000 mt, up 7% on the week, and 23% higher than this time last year as high crush margins, currently above RMB150/mt ($23.9/mt), forced run rates higher.

Last week, 1.51 million mt of soybeans were crushed, 30,000 mt up from the week before, which in turn led to higher soybean oil production which amounted to 1.6 million mt in the last week, higher than the 1.51 million mt produced a week earlier.

The total crushed soybean volume in March was 7.4 million mt, 3.15 million mt higher than February, and 12% higher than March last year.

March soybean arrivals amounted to 5.5 million mt, with 18.5 million mt expected for April and May combined.