China continued to dominate the global oilseeds market in MY13/14, especially in soybeans where it took 65 percent of total world exports, and 30 percent of total U.S. soybean production. Following record oilseed purchases of 75.6 million tons in MY13/14, Post estimates the long-term trend of rising imports will continue and reach 77.3 million tons in MY14/15, and 82.2 million tons in MY15/16. Urbanization, rising incomes, and modernization of the feed and livestock sectors have fostered oilseed consumption, forecast at 137 million tons in MY15/16. China's soybean imports are estimated to set records of 73 million tons in MY14/15 and forecast at 77.5 million tons in MY 15/16. Due to a combination of policy constraints and stagnating yields, soy production in China is forecast to decline to 11.7 million tons in MY15/16. Soybeans are the only major agricultural crop in which China is dependent on imports for the Lion's share of its supply.

Executive Summary:

China's domestic oilseed production growth continues to be restricted by limited arable land and policies favoring grain production. China's total planted area for all oilseed crops is forecast to drop 2.2 percent to 23.4 million hectares (MHa). Correspondingly, China's MY15/16 total oilseed production is forecast down 2.6 percent to 55.5 million tons. The lower forecast reflects an expected decline in cottonseed production of 1.1 million tons as recent changes in government policy may impact cotton profits. In addition, a slight fall in soybean and rapeseed production responding to lower comparative profits in MY14/15 also contributed to the lower total oilseed production forecast for MY15/16.

With limited domestic production, soybean and rapeseed imports remain strong. MY15/16 total oilseed consumption forecast rose to 137.3 million tons driven by increasing demand for meats, seafood, and vegetable oils. Additionally, the expansion of the oilseed crushing sector, growth in the feed industry, and advancements in concentrated livestock and aquatic farming are collectively spurring demand and the need for imports.

Out of the total oilseed imports of 82.2 million forecasts for MY15/16, China's total soybean imports could reach 77.5 million tons, up from the estimated 73 million tons in MY14/15. The MY15/16 forecast shows total Chinese imports of soybeans have almost tripled in the last decade, growing from the 28.3 million tons imported in MY05/06. China's imports of soybeans from the United States reached 27 million tons in MY13/14, up 5 million tons over the previous year and accounting for 38 percent of China's total soybean imports. Imports from the United States are expected to stay robust and reach 29 million tons in MY15/16, almost three times the amount in MY05/06. That said, imports from the United States still face strong competition from South American suppliers.

Oilseeds Situation and Outlook

Overall, China's domestic oilseed production continues to decline while demand for oilseed products surges ahead. Lower cotton profits resulting from the recent change in government cotton policy in MY14/15, and comparatively low profits for soybeans and rapeseed are expected to reduce the total oilseed planted area by 2.2 percent to 23.4 MHa. Correspondingly, MY15/16 total oilseed production is forecast down 2.6 percent from the previous year to 55.5 million. Future production prospects are further dampened by the lackluster revenue of major oilseed crops as available acreage is increasingly planted to more lucrative grain crops enjoying better government support. Furthermore, inadequate production tools - from economies of scale, agronomic practices, technology resources and input quality – also limit the potential for oilseed yield gains. Meanwhile, Chinese consumption of meats, seafood, and vegetable oils and soybeans for food-processing continues its unrelenting growth, fueled by rising affluence, urbanization, and expanding consumer choices. In response to these dietary demands, China must supplement its domestic oilseed resources with imports, primarily from the Brazil, the United States, Argentina and Canada.

China's cotton planted area is expected to fall by 9 percent in MY15/16 in response to a major change in the government's support policy implemented in MY14/15. This government policy reduces support to farmers in the Yellow and Yangtze River regions while increasing support to farmers in Xinjiang. Grain and cash crops are most likely to replace cotton in these regions. As the new support policy generally guarantees similar past returns for Xinjiang farmers, Xinjiang planting intentions appear to be stable but not enough to offset the drop in total planted area.

Conversely, following a price dive in MY13/14, peanut farmers are expected to increase acreage and production in response to a profit recovery in MY14/15. However, expansion is constrained by limited land.

PSD Table

Country

China, Peoples Republic of

Commodity

Total Oilseeds (1000 tons; 1000Ha)

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

Area Planted

25,646

24,737

25,425

23,920

0

23,400

Area Harvested

24,779

24,737

24,275

23,920

0

23,400

Beginning Stocks

13,166

13,166

15,562

15,562

0

15,093

Production

58,915

58,888

57,257

57,007

0

55,550

MY Imports

75,636

75,570

77,945

77,300

0

82,250

MY Imp. from U.S.

25,041

27,049

27,000

28,000

0

29,000

MY Imp. from the EC

0

0

0

0

0

0

TOTAL SUPPLY

147,717

147,624

150,764

149,869

0

152,893

MY Exports

938

938

930

890

0

840

MY Exp. to the EC

230

230

230

230

0

228

Crush Dom. Cons.

107,730

107,634

111,930

110,416

0

114,000

Food Use Dom. Cons.

17,180

17,183

17,075

17,770

0

17,880

Feed,Seed,Waste Dom.Cons.

6,307

6,307

5,667

5,700

0

5,410

TOTAL Dom. Consumption

131,217

131,124

134,672

133,886

0

137,290

Ending Stocks

15,562

15,562

15,162

15,093

0

14,763

TOTAL DISTRIBUTION

147,717

147,624

150,764

149,869

0

152,893

Calendar Year Imports

72,585

76,648

75,925

77,180

0

81,625

Calendar Year Imp. U.S.

28,505

30,044

24,005

28,000

0

29,000

Calendar Year Exports

1,050

1,053

1,060

1,070

0

1,040

Calendar Year Exp. to U.S.

83

91

83

16

0

16

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

HS Code

Description

M.F.N.(%)

Gen (%)

VAT Rate %

ED Rate %

Seed

12011000

Soybeans, seed

0

180

13

12019010

Yellow soybean

3

180

13

12019020

Black soybean

3

180

13

12019030

Green soybean

3

180

13

12019090

Other soybean

3

180

13

12023000

In shell peanut, seed

0

0

13

12024100

In shell peanut, other

15

70

13

12024200

Shelled peanut

15

70

13

12030000

Copra

15

30

13

5

12040000

Linseed

15

70

13

5

20081110

Peanut kernels, in airtight containers

30

90

17

15

20081120

Roasted peanuts

30

80

17

15

20081130

Peanut butter

30

90

17

15

20081190

Other processed peanuts

30

80

17

5,15

12051010

Low erucic acid rape seed, seed

0

80

13

12051090

Low erucic acid rape seed, other

9

80

13

5

12059010

Other rapeseed, seed

0

80

13

12059090

Other rapeseed, other

9

80

13

5

12060010

Sunflower seeds, seed

0

0

13

5

12060090

Sunflower seeds, other

15

70

13

5

12072100

Cottonseeds for cultivation

0

0

13

5

12072900

Cottonseeds, other

15

70

13

5

12074010

Sesame seeds for cultivation

0

0

13

5

12074090

Sesame seeds, other

10

70

13

5

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