Oilseed Meal Situation and Outlook

Total Meals

MY15/16 protein meal (including fish meal) production is forecast at 80.6 million tons, up 3.9 percent over the 77.6 million tons in the previous year, a rise attributable to increased crushing of imported soybeans. MY15/16 total protein meal supply is forecast to reach 81.8 million tons. This forecast includes 1.2 million tons of meal imports (fish meal and rapeseed meal).

Total protein meal consumption in MY15/16 is forecast at 79.5 million tons, up 2.9 million tons or 3.7 percent over MY14/15 due to continuing industrialized feed demand from the livestock and aquaculture sectors. Soybean meal (SBM) continues to dominate the protein meal sector, accounting for 74 percent of total meal consumption trailed by rapeseed meal at 14 percent and cottonseed meal at 5 percent.

Many industry sources indicated that the industrialized feed production for 2014 will be higher than last year, and above 195 million tons. Conversely, the CNGOIC estimate was191.5 million tons, down one percent (or 1.9 million tons) over the previous year. In the first months of 2014, feed production was affected by lower feed consumption. The livestock sector was hit by an outbreak of animal diseases and negative swine profits, while natural disaster affected aquaculture farming in southern China. While some of these factors may have softened the feed production in the first months of 2014, production recovered in second half of 2014 contributing to a moderate growth for the whole year. Industry data showed that major feed-producing provinces including Guangdong, Henan, Sichuan and Hunan reported feed production growth in 2014. Specifically, the Guangdong Feed Industry Association estimated the province continues to be the largest feed producer. Guangdong's total feed production was estimated at 244.23 million tons in 2014, up 7.7 percent over the previous year, with growth for all feed categories. In particular the swine feed production increased by 12.7 percent. Shandong province, China's largest feed-producer, reported a stable feed production in 2014.

China's 12th Five Year (2011-2015) Plan for Feed Industry Development forecasts that total industrialized feed production will average an annual increase of 7.6 million tons to reach 200 million tons by 2015. The current trend indicates this target will be reached earlier.

China's 12th Five Year Plan - Animal and Feed Production Target

(in million tons)

Year

Total Meat

Eggs

Milk

Industry Feed

2015

85

29

40

200

2010

79.2

27.6

37.5

162

Average yearly growth

1.16

0.28

0.5

7.6

Consumption Outlook

Investment in animal production is increasingly popular leading larger-scale and more modern animal production operations to demand more industrialized feed. In addition, traditional small-scale operations are phasing out the use of self-mix feed for alternative feeds to improve productivity and efficiency. Total SBM inclusion in feed is expected to increase along with the growth of industrialized feed production.

The following table shows MOA's growth targets for scale animal farming production from 2005 through 2015, reflecting a more rapid expansion of scale animal farming in recent years. The provincial swine industry association data for 2012 shows that the swine production by scale farms (with annual slaughter of 500 pigs or above) accounted for 87 percent in Jiangxi province, and 80 percent in Zhejiang province.

China's Animal Scale Farming Development (2005 -2015)

Percentage out of total farms

Scale swine farms

Scale poultry farms

Scale dairy farms

2015 (est)

50%

92% or above

38%

2010

34%

82%

28%

2005

16%

66%

11%

According to China's National Statistics Bureau's (NSB) 2014 China Social and Economic Development Communique, the 2014 total meat production (pork, beef, mutton and poultry) is up 2 percent from 2013 to 87.07 million tons; egg production is up 0.6 percent to 28.94 million tons; and milk (cow) production is up 5.5 percent. Out of total meat production, 2014 pork production is up 3.2 percent from the previous year to 56.71 million tons. In addition, aquaculture continues to grow with total cultured seafood products estimated at 47.62 million tons (out of total seafood production of 64.5 million tons), up 4.9 percent over the previous year.

The following table shows an estimate of feed needed for pork, egg and poultry meat production based on a normal feed conversion rate. The estimated feed needed to produce these three animal products are on average 11 million tons higher than the MOA feed production. China's total feed consumption largely exceeds the MOA official feed production if all major animal product production is included.

Feed Demand Estimates Based on Major Animal Products Volume

(in million tons)

Pork

Eggs

Poultry Meat

Feed Demand Estimates

MOA feed production**

2014

56.71

28.94

18.00*

274.9

261.8

2013

54.93

28.76

17.98

269.1

259.0

2012

53.43

28.61

17.78*

263.8

262.3

Note: Feed conversion rate for Pork - 3:1 and for Eggs -2.5:1; Poultry -1.8:1; *FA/Beijing Estimates;

**Compound feed production and concentrate converted to compound equivalent production

Source: Pork, egg and poultry data is based on NSB

The rise in protein meal demand is attributable to an increased use of industrialized feed for these growing animal production sectors. Although China's swine sector reported hog price remained low in 2014 and saw no recovery in first weeks of 2015, pork production in 2014 gained 3.2 percent growth from 2013. Total estimated meat production grew 19.6 percent from 2008 to 87.07 million tons in 2014. Cultured seafood production stands at 39.6 percent above than that of 2008. Along with the animal production growth, compound feed production continues to rise with total production for 2014 is estimated at 164.2 million tons, up 55 percent over 2008, while concentrate feed continues to decline. MY15/16 protein meal consumption is forecast at 79.5 million tons, up 3.7 percent, or a net increase of 2.86 million tons over the previous year, with a net increase of SBM consumption at 2.96 million tons. Cottonseed meal consumption is expected to decline as a result of lower domestic supplies.

According to NSB, in 2012 China's per capita expenditures for animal proteins (including all meats, poultry, eggs, and aquatic products) averaged $272, up from $242 in the previous year. Spending increased in all provinces but varies widely, with the highest spending in Guangdong ($460) and the lowest in Shanxi province ($112). Large cities and a few coastal provinces are well above average and skew the national median expenditure; most regions lie well below the national average.

In 2012, annual per capita consumption of meats and seafood continued to differ between urban and rural communities by an average of 26.74 Kg. Potential increases in protein consumption among the 629.61 million people living in rural areas (out of the 1,360.72 million according to the 2014 China Statistical Yearbook) opens opportunities for higher protein meal demands. Additionally in 2012, the consumption of milk and related products remains low among the rural population (5.29 Kg) compared to the urban population (13.95 Kg). As rural incomes rise, rural resident's ability to consume more animal protein products will create additional demand for protein meal in feed products. Although the 2014 China Statistical Yearbook is no longer separating statistic series for "per capita expenditures for animal proteins by province, by rural and urban Household", the general growing trend is expected to carry on in 2013 and 2014.

Overall increases in meat and seafood demand are also fueled by population growth and urbanization. According to NSB, China's average annual net population growth was 6.5 million from 2008 to 2013. Additionally, the rapid urbanization continues with annual growth in urban populations averaging 21.42 million from 2008 to 2013, with 19.29 million new urban residents added in 2013. Greater demand for meats and seafood will continue to fuel animal production and the need for feed. Potential growth along the value chain signals encouraging prospects for oilseed meals in the coming years.

PSD Table

Country

China, Peoples Republic of

Commodity

Total Meal (1000 tons)

2013/14

2014/15

2015/16

USDA Official

Post Estimate New

USDA Official

Post Estimate New

USDA Official

Post Estimate New

Market Year Begin

10/2013

10/2014

10/2015

Crush

108,930

107,634

113,130

111,616

0

115,200

Extr. Rate, 999.9999

0

Beginning Stocks

0

0

0

0

0

0

Production

75,230

75,030

78,972

77,589

0

80,590

MY Imports

1,394

1,428

1,080

1,162

0

1,202

MY Imp. from U.S.

81

88

70

90

0

95

MY Imp. from the EC

0

0

0

0

0

0

TOTAL SUPPLY

76,624

76,545

80,052

78,751

0

81,792

MY Exports

2106

2065

1,813

2,083

0

2,263

MY Exp. to the EC

100

100

50

45

0

45

Industrial Dom. Cons.

1,619

1,636

1,605

1,652

0

1,702

Food Use Dom. Cons.

0

0

0

0

0

0

Feed Waste Dom. Cons.

72,899

72,720

76,634

75,017

0

77,827

TOTAL Dom. Consumption

74,518

74,356

78,239

76669

0

79,529

Ending Stocks

0

0

0

0

0

0

TOTAL DISTRIBUTION

76,624

76,421

80,052

78,752

0

81,792

Calendar Year Imports

1,110

1,996

1,085

1,515

0

1,607

Calendar Year Imp. U.S.

82

99

70

90

0

95

Calendar Year Exports

2,179

2,137

1,233

1,983

0

2,152

Calendar Year Exp. to U.S.

20

36

20

38

0

38

Taxes & Duties. Meals (Jan 01-Dec 31, 2015)

HS Code

Description

M.F.N.(%)

Gen (%)

VAT Rate %

ED Rate %

Meal

12081000

Soyflour

9

70

17

12089000

Other

15

80

17

15

23012010

Fish meal

2

11

13

23025000

Legume sweepings

5

30

13

23033000

Brewing or distilling dregs and waste

5

30

13

23040010

Soy meal, oil cake

5

30

13

13

23040090

Soy meal, other

5

30

13

13

23050000

Peanut meal

5

30

13

23061000

Cottonseed meal

5

30

13

13

23062000

Linseed meal

5

30

13

13

23063000

Sunflower seed meal

5

30

13

13

23064100

Low erucic acid rapeseed meal

5

30

13

13

23064900

Other rapeseed meal

5

30

13

13

Note: VAT – Value Added Tax Rate; ED – Export Drawback Rate

PSD Table

Country

China, Peoples Republic of

Commodity

Meal, Peanut (1000 tons)

2013/14

2014/15

2015/16

USDA Official

Post Estimate New

USDA Official

Post Estimate New

USDA Official

Post Estimate New

Market Year Begin

10/2013

10/2014

10/2015

Crush

8,710

8,710

8,700

8,530

0

8,670

Extr. Rate, 999.9999

0

0

0

0

0

0

Beginning Stocks

0

0

0

0

0

0

Production

3,470

3,409

3,465

3,339

0

3,393

MY Imports

60

56

30

30

0

30

MY Imp. from U.S.

0

0

0

0

0

0

MY Imp. from EU

0

0

0

0

0

0

Total Supply

3,530

3,465

3,495

3,369

0

3,423

MY Exports

1

1

3

3

0

3

MY Exp. to EU

0

0

0

0

0

0

Industrial Dom. Cons.

0

0

0

0

0

0

Food Use Dom. Cons.

0

0

0

0

0

0

Feed Waste Dom. Cons.

3,529

3,464

3,492

3,366

0

3,420

Total Dom. Cons.

3,529

3,464

3,492

3,366

0

3,420

Ending Stocks

0

0

0

0

0

0

Total Distribution

3,530

3,465

3,495

3,369

0

3,423

CY Imports

40

38

35

38

0

35

CY Imp. from U.S.

0

0

0

0

0

0

CY Exports

3

1

3

8

0

8

CY Exp. to U.S.

0

0

0

8

0

8

PSD Table

Country

China, Peoples Republic of

Commodity

Meal, Sunflowerseed (1000 tons)

2013/14

2014/15

2015/16

USDA Official

Post Estimate New

USDA Official

Post Estimate New

USDA Official

Post Estimate New

Market Year Begin

10/2013

10/2014

10/2015

Crush

1,370

1,343

1,280

1,229

0

1,280

Extr. Rate, 999.9999

1

1

1

1

0

1

Beginning Stocks

0

0

0

0

0

0

Production

745

728

698

666

0

693

MY Imports

0

0

0

0

0

0

MY Imp. from U.S.

0

0

0

0

0

0

MY Imp. from EU

0

0

0

0

0

0

Total Supply

745

728

698

666

0

693

MY Exports

0

0

0

0

0

0

MY Exp. to EU

0

0

0

0

0

0

Industrial Dom. Cons.

64

64

65

62

0

62

Food Use Dom. Cons.

0

0

0

0

0

0

Feed Waste Dom. Cons.

681

664

633

604

0

631

Total Dom. Cons.

745

728

698

666

0

693

Ending Stocks

0

0

0

0

0

0

Total Distribution

745

728

698

666

0

693

CY Imports

0

0

0

0

0

0

CY Imp. from U.S.

0

0

0

0

0

0

CY Exports

0

0

0

0

0

0

CY Exp. to U.S.

0

0

0

0

0

0

PSD Table

Country

China, Peoples Republic of

Commodity

Meal, Cottonseed (1000 tons)

2013/14

2014/15

2015/16

USDA Official

Post Estimate New

USDA Official

Post Estimate New

USDA Official

Post Estimate New

Market Year Begin

10/2013

10/2014

10/2015

Crush

10,300

10,231

9,600

9,657

0

8,900

Extr. Rate, 999.9999

0

0

0

0

0

0

Beginning Stocks

0

0

0

0

0

0

Production

4,462

4,333

4,159

4,090

0

3,769

MY Imports

0

0

0

2

0

2

MY Imp. from U.S.

0

0

0

0

0

0

MY Imp. from EU

0

0

0

0

0

0

Total Supply

4,462

4,333

4,159

4,092

0

3,771

MY Exports

50

33

30

30

0

10

MY Exp. to EU

0

0

0

0

0

0

Industrial Dom. Cons.

145

162

120

140

0

140

Food Use Dom. Cons.

0

0

0

0

0

0

Feed Waste Dom. Cons.

4,267

4,138

4,009

3,922

0

3,621

Total Dom. Cons.

4,412

4,300

4,129

4,062

0

3,761

Ending Stocks

0

0

0

0

0

0

Total Distribution

4,462

4,333

4,159

4,092

0

3,771

CY Imports

0

0

0

2

0

2

CY Imp. from U.S.

0

0

0

0

0

0

CY Exports

75

13

30

30

0

35

CY Exp. to U.S.

0

0

0

0

0

0