China has been massaging data on soybean imports and consumption of soybean meal to hide the failure of its policies aimed at reducing reliance on imported soybeans.
Last month China's customs data reported that 99.41 million metric tons (mmt) of soybeans were imported during the 2023 calendar year, an 11.41% increase from 89.218 mmt imported during 2022.
However, adding up the monthly soybean import totals reported by customs over the last 12 months gives me a bigger total of 101.71 mmt for 2023. That would have been a record amount, exceeding the previous record of 100.3 mmt imported during calendar year 2020. What happened?
The 99.41 mmt total appears to have been doctored to whittle down the annual total and keep it under the symbolic 100-mmt barrier. A record soybean import total would have drawn attention to the failure of highly publicized and costly Chinese policies to reduce reliance on imported soybeans. The revisions also foil a prediction that China's soybean imports would exceed 100 mmt made in December by the head of the U.S. Soybean Export Council office in Beijing in an interview with a Chinese news outlet.
The 2022 import total also appears to have been doctored. Last month's customs report said 89.218 mmt had been imported during 2022, but a year ago customs reported that 91.08 mmt of soybeans had been imported during 2022.
Customs officials appear to have made retrospective revisions that cut the 2023 total by 2.31 mmt and the 2022 total by 1.86 mmt. They probably reduced both years' numbers to keep the year-to-year change realistic. A comparison of monthly totals from previously published monthly reports with monthly totals currently in the customs database indicates that small downward revisions were made in monthly totals for January-June 2023 with no changes for July-December. Small changes were also made for 8 of the 12 months of 2022.
The 10.2-million-tonne increase in soybean imports during 2023 reported by official data far outstrips the 0.6-million-tonne increase in domestic soybean production achieved last year at great expense through multiple subsidies, earmarked bank loans, and "instructions" issued to farming enterprises.
A second questionable claim comes from China's Feed Industry Association which reported that use of soybean meal in manufactured animal feed dropped 11.8% in 2023 and the percentage of soybean meal in feed dropped 2.6 percentage points. These numbers appear to show that the industry achieved a directive issued in the communist party's 2023 Document No. 1 to "deepen implementation of the action plan to reduce and replace soybean meal used in animal feed." The Feed Industry Association's web site features a large banner promoting the soymeal reduction program and a November 2022 article on the association's site calling for faster reduction of soymeal use in poultry and aquaculture said the soymeal reduction program was of the utmost importance.
However, the reported 11.8% decrease in soymeal use doesn't seem to square with the 11.4% increase in soybean imports. The November 2022 Feed Industry Association article said 85% of soybean meal in China is produced by crushing imported soybeans, so the increased volume of imported soybeans implies an increased supply of soybean meal.
The CASDE soybean balance sheet issued by China's agriculture ministry shows increasing volumes of soybeans crushed during each market year: from 90.5 mmt in market year 2021/22 to 95.9 mmt in 2022/23, and 97.8 mmt in 2023/24, which also implies a growing supply of soybean meal.
If the precipitous 11.8% drop in soybean meal use is true, what's happening to the increased supplies of soybean meal?
There doesn't seem to be any indication that soybeans or soybean meal are being stockpiled. Instead, a report from China Grain Net (an organization affiliated with the government's grain reserve company) says the government has accumulated stockpiles of domestic soybeans and soybean oil.
The import data was accepted at face value in China Grain Net's review of the 2023 soybean market. The report praised a series of policies that boosted domestic soybean output to over 20 mmt in 2022 and 2023, then listed a series of soybean procurements by Sinograin and local governments that removed about 2.7 mmt of 2022/23 domestic soybeans from the market to prevent prices from crashing. Sinograin also purchased an undisclosed amount of 2023/24 domestic soybeans last October. Sinograin also cut back on its auctions of soybean reserves to ease downward pressure on prices.
The China Grain Net report did not mention any stockpiling of imported soybeans.
The report revealed that reserves of soybean oil were bloated in 2023 due to import stockpiling during the 2022 lockdown year that wasn't needed because recovery of demand after the lifting of covid lockdowns was much weaker than expected.
China's usual tactic is to blame "subsidized" and "genetically modified" American crops for its problems, but it is Brazil's soybean supply boom that kept soybeans cheap. Low prices induced Chinese buyers to import record volumes, undercutting China's grand plan to reduce reliance on imported soybeans. The China Grain Net report cited a record crop in Brazil and low prices for the surge in soybean imports. The report noted that Brazil accounted for 70% of China's soybean imports during 2023. The U.S. share was 24%.
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