Changing pork production transforms Chinese soya meal productionData da publicação: 08/05/2018
Falling pork consumption and a change in swine production areas is driving a transformation in Chinese regional soyabean meal demand, according to a new Rabobank report.
Growth in Chinese pork consumption was expected to clock at 1% CAGR until 2020, less than half of the 2.2% CAGR growth witnessed in the past 10 years, while the country’s hog-rearing capacity was moving inland from coastal areas, Rabobank said in the report ‘Location is Key to China’s Soybean Crush’, published in April.
“In the past decade, a growing share and number of hogs were fed with soya meal in China, driven by constant industrialisation and development of the animal husbandry sector. Nowadays, roughly 60% of soya meal is consumed in hog-feed rations,” Rabobank said.
Overcapacity remained a long-lasting problem for Chinese soya meal production, with only 55% of production capacity utilised at any given time.
Due to more than 90% of China’s soyabean crushing capacity being located in coastal areas, the geographic shift in hog farming was causing both opportunities and challenges for the crushers, depending on their region, the report said.
In northeastern China – where crush capacity utilisation was around 41.7% – there was “certain growth potential” for soya meal producers who were forecast to be able to meet regional demand. However, in the long run, these producers – mostly consisting of smaller plants in remote areas – would be phased out of the market.
Northern China was the largest pork producing region and also had the largest soyabean crushing capacity – roughly one-third of the country’s total capacity – but due to a higher-than-average utilisation ratio of 57%, Rabobank expects to see consolidation rather than capacity expansion in the area.
Northwestern China was set to register the highest regional growth rate in pork production at 2.8%, but due to a generally low share of the market, absolute volumes would still remain low. The region’s soyabean crush capacity would also remain small-scale due to disadvantages in location, Rabobank added.
The demand for soya meal in eastern China was low due to an expected 2.1%/year decline in pork production, but the area’s waterway connections inland were considered the most cost-effective mode of transportation, which boosted the region’ outlook for soya crush capacity expansion and greenfield projects.
Central China was projected to register a relatively high pork production growth rate at 1.8%/year but, due to logistical difficulties and a cost disadvantage, the area had few crushing plants and regional soya meal demand was supplied by eastern crushers.
South China was facing a situation similar to the eastern parts in that its pork output was projected to fall but it had “massive” soyabean crush capacities, with most plants located at sea ports.
However, the transportation and logistics networks on the Pearl River were less developed than in the east, which meant the region’s utilisation ratio would remain at the current 52% or go even lower through to 2020.
Southwestern China, while accounting for 20% of China’s pork production, was responsible for only 2% of the total national crush capacity, making the region heavily dependent on soya meal supplies from the east and south and an unlikely focus for future expansion investment.