Oilseed traders in China on Monday played down the possible impact on soy consumption of new government guidelines to lower the protein content of animal feed, saying that increasing soymeal and soybean prices would be a far larger curb on appetite.
The country has been going after multiple ways to reduce its consumption of feed ingredient soymeal, made from soybeans, amid a festering trade war with the United States, which is its second biggest supplier of beans.
China, which normally buys about two thirds of globally traded soybeans to help feed its massive livestock herd, has been taking measures such as turning to alternative meals and reducing foreign protein levels in feed.
China’s Feed Industry Association on Friday approved new standards for feed for pigs and chickens, lowering the protein levels in pig feeds by 1.5 percent points and those for chickens by one percentage point, the agriculture ministry said in a statement during that day.
The standards are only guideliens and the ministry did not say when they would take effect, with traders saying that prices would continue to be the key focus for soymeal consumers.
“The new standards are not enforceable (as they are based on guidelines),” said a soybean trader in China, requesting not to be named because of the nature of the matter.
Another trader who’s based in Beijing said that most big feed mills were already using less soymeal than last year because prices had increased versus 2017. The most actively traded soymeal contract on the Dalian Commodity Exchange has increased 20 percent since the start of the year to record levels of more than 3,300 yuan, or $474.37, each ton.
“They (mills) were also able to find substitutes. Soymeal consumption is based on the soymeal price and the price of substitutes,” he said.
Those comments came even as the government said on Friday that the new standards would slash China’s annual consumption of soybeans by 14 million tonnes, market a fall of around 13 percent from the last crop year in the world’s top buyer of the oilseed.
The ministry also said that China’s overall yearly consumption of soymeal would fall by 11 million tonnes. The country used 71 million tonnes of soymeal to make animal feed in the 2017 to 2018 crop year.
The agriculture ministry said that China depended on imports for nearly 80 percent of its protein raw materials, and that this had caused a “bottleneck” to development of the country’s feed and livestock sectors.
Decreasing protein levels in feed would also decrease the negative impact of the environment, it said.
The National Development & Reform Commission (NDRC), which is the state economic planner, in July discussed ways to switch up pigs’ diets with major feedmakers including New Hope Group, Dabeinong, CP Group, and Hefeng Group.
China is now kicking off what is typically its top buying season for US soybeans. On the other hand, only a handful of US cargoes have arrived in the country in recent months and it’s expected to largely rely on beans from top supplier Brazil.
Its soybean imports are set to drop by a quarter in the last three months of 2018, their biggest fall in at least 12 years as buyers curb purchases.