China soybean acreage to decline 11% YoY? - CLSA

China's Ministry of Agriculture (MOA) compiled info from 500 monitoring stations and announced that Chinese farmers will likely increase total plantings for grains by 1.2% YoY. Rice (+1.9% YoY) and corn (+2.1% YoY) will be net gainers. Wheat is likely to stay unchanged. But soybeans are forecast to lose out 11.2% acreage YoY.



Source: World Perspective "In-Country Analysis" (March 21, 2011)

Comments by Di Shui, Plantation analyst:
China already accounts for >50% of global soybeans seaborne trade (A fairly recent phenomenon given that China was more or less self sufficient just 15 years ago.)
Soybean imports contribute to ~80% of China’s total domestic consumption
Consumption per capita of soybeans is still growing, based on growing domestic demand for soymeal (rising protein consumption) and soybean oil
Would seem like fewer acres = more soybean demand next year
This in a year where:
Soybean is likely to lose out acreage to corn in the US
US/Brazil/Argentina continue to churn out soy-based biodiesel
Brazilian soybean harvests are facing rain-related disruptions (only 50% harvested to date vs 60% last year, quality issues, and rotting from wet storage facilities).

Still maintain volatile ag market/pricing outlook near term. But at some point, growing demand + supply disruptions + low stock to usage ratios will translate into price support for oilseeds and underlying oils/derivative products. All these bode well for soybean oil substitutes like CPO, rapeseed oil, sunflower oil.