WASHINGTON, D.C., U.S.  — China’s demand for oilseed increases as the African swine fever (ASF) outbreak bolsters demand for chicken, beef and aquaculture production as unfounded health fears and consumer desire to diversify diet, according to a March 22 Global Agricultural Information Network (GAIN) report from the Foreign Agricultural Service of the U.S. Department of Agriculture (USDA).

“China’s domestic oilseed production will remain stagnant in the 2019-20 marketing year, while domestic demand for oilseed products will continue to grow steadily, despite the impact of ASF,” the USDA said. “Therefore, China will continue to rely on oilseed imports from Brazil, the United States, Argentina and Canada.”

China’s 2019-20 market year soybean production is 16.4 million tonnes, a 4% increase from the previous year. The USDA said estimated soybean production for market year 2018-19 was higher than the previous marketing year due to changes in government grain subsidies, which led to lower corn profits in market year 2017-18, encouraging farmers to plant more soybeans.

According to the China National Grains and Oilseeds Information Center (CNGOIC), as of the end of December 2018, farmers still held about 70% of their production, compared to 50% to 60% in recent years.

“In late February 2019, citing the need to stabilize the market, the Heilongjiang provincial government offered farmers a soybean purchase price between RMB3,420 and RMB3,460 per tonne, or between $518 and $525 per tonne,” the USDA said. “The relatively slow marketing pace for the market year 2018-19 crop may overshadow soybean sowing in market year 2019-20.”

Even though some of the oilseed import decrease is attributed to the ASF outbreak another issue impacting imports is the U.S.-China trade talks.

The USDA forecasts China’s soybean imports for market year 2019-20 to reach 91.5 million tonnes, an increase from the estimated 88 million tonnes in market year 2018-19 but lower than the market year 2017-18 imports of 94.1 million tonnes.

“The U.S.-China trade friction also dampened imports, as China imposed an additional 25% import tariff on U.S. soybeans and importers demonstrated their concerns about China’s potential application of non-tariff barriers on U.S. soybeans,” the USDA said.

This caused importers to stop purchases of U.S. soybeans in July 2018.

“Accompanying bilateral trade talks, sales of U.S. soybeans to China began December 2018, mainly by state-owned importers,” the USDA said. “In February, China indicated plans to purchase another 10 million tonnes of U.S. soybeans, in addition to the 10 million contracted in December 2018 and February 2019. According to industry contacts, soybean imports from the U.S. remain commercially difficult.”