Lysine export boom belies amino acid-soymeal substitution claims

Chinese officials claim that livestock producers are substituting amino acids for soybean meal in animal feed, reducing China's reliance on imported soybeans. A spike in China's exports of the main amino acid is inconsistent with these claims.

China has built massive amounts of processing capacity to produce lysine--the most common amino acid--from corn (the main raw material). China is now the world's dominant lysine producer and exporter. Yet a November 2023 report by China's Mysteel agricultural market site said production of lysine is less than half of China's production capacity. Mysteel said China's amino acid industry suffers from serious excess capacity.

At peak output in 2020 Mysteel reports that China used 11 million metric tons of corn to produce lysine and other feed additives. Since then production has slipped to 8 million metric tons in 2023 due to weak feed demand and high corn prices. This does not agree with proclamations from Chinese officials that amino acid is replacing soybean meal at a rapid clip.

Meanwhile, China's exports of lysine have boomed. Exports began to accelerate in 2016 when Chinese officials began giving subsidies for every ton of corn--the primary raw material for lysine--used by industrial processors to dispose of a massive stockpile of Chinese corn. China's lysine exports grew from 257,000 metric tons in 2014 to 405,000 mt in 2018 and 785,000 metric tons in 2020. The corn stockpile was finally depleted in 2020 and subsidies ended. That year officials first announced the plan to replace soybean meal with amino acids. Chinese corn prices also shot up 40 percent that year, increasing the cost of raw material. Nevertheless, lysine exports kept growing to reach 961,000 metric tons in 2023. U.S. lysine exports were only 87,000 metric tons that year.

Source: China and U.S. customs data.

China's exports have overwhelmed the global market for lysine. In 2012 China was one of 5 major lysine-exporting countries. By 2023 China was the dominant exporter as its overseas sales boomed over the decade that followed while sales by other major exporters--the United States, Indonesia, Brazil, and South Korea--shrank precipitously. 

Source: customs data

If Chinese livestock producers are eagerly using lysine to replace soybean meal, why are Chinese lysine exports booming? The claims of growing lysine use in China do not square with reports that the amino acids industry is suffering from serious excess capacity problems.