BEIJING—The Chinese regime on Oct. 29 rolled out new guidelines to lower the protein content in soymeal of animal feed, and oilseed traders expect soy consumption to be affected by it.
The nation has been pursuing multiple ways to reduce its consumption of feed ingredient soymeal, made from soybeans, amid a festering trade war with the United States, its second biggest supplier of beans.
China, which typically buys about two thirds of globally traded soybeans to help feed its huge livestock herd, has been taking steps such as turning to alternative meals and reducing 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 feed by 1.5 percentage points and those for chickens by one percentage point, the agriculture ministry said in a statement that day.
The standards are only guidelines 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 ministry said on Friday that the new standards would cut China’s annual consumption of soybeans by 15.4 million tons, marking a drop of about 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 12 million tons. The country used 78 million tons of soymeal to make animal feed in the 2017-18 crop year.
The agriculture ministry said 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.
The National Development & Reform Commission (NDRC)—the state economic planner—in July discussed ways to switch up pigs’ diets with major feed makers including New Hope Group, Dabeinong, CP Group and Hefeng Group.
Turning to Brazil
China is entering what is typically its top buying season for U.S. soybeans. However, only a handful of U.S. cargos have arrived in the country in recent months and it is 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.
Beijing imposed 25 percent tariffs on $34 billion worth of U.S. products including soybeans on July 6, in retaliation for U.S. tariffs on Chinese goods of the same amount.
Soymeal futures on the Dalian Commodity Exchange for January delivery fell more than 1 percent on Monday to 3,349 yuan per ton.
The new guidelines is expected to have an impact.
“This will have a very important impact on industry, but it’s still not clear how long it will take to be fully introduced,” said Yang Linqin, an analyst at Cofco Futures.
By Chen Aizhu, Li Pei & Dominique Patton