China Increases Domestic Soybean Acreage Under the Trade War

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China is the world’s largest consumer of soybeans and the destination of more than half of the United States soybeans. In the trade dispute with the United States, China is trying to reduce its dependencies on US soybean imports. China’s Ministry of Agriculture predicted in May that China will cut its soybean imports for the first time in 15 years in 2018/19.

Also Read: China Has Halted Its US Soybean Orders Due to Trade Tensions

Meanwhile, in addition to reducing imports, China would have to increase its own production. A central province in China has already ordered farmers to double their soybean planting acreage. The agriculture department of Henan said it will actively guide farmers to expand the soybean planting area by 500,000 mu (82,370 acres). The provincial government stated that as of June 1st, the province had 300,000 mu of land dedicated to soybean production.

As shown in the figure below, soybean production in Henan Province accounted for 5% of total amount in China during 2008-2010.

china soybean - China Increases Domestic Soybean Acreage Under the Trade War

Source: USDA

Besides, according to an emergency notice issued by the Agricultural Commission in Changchun, the provincial capital of Jilin Province, all regions and towns must do everything possible to increase soybean planting acreage as a “political priority” and provide daily feedback on soybean planting after April 29. Heilongjiang Agricultural Commission also issued a similar directive ordering farmers to plant more soybeans.

Rich Nelson, director of research at Allendale, an agricultural market research and trading company, said: “China’s policy in 2017 has shifted to encouraging soybean acreage for 2018 instead of corn.”

According to a Reuters report, China’s Ministry of Agriculture said China’s own soybean production is also set to grow, with 2018/19 output forecast to rise 4.9 percent to 15.27 million tonnes. Soybean acreage will increase by 7.8 percent to 8.39 million hectares (20.7 million acres).

With the support of Chinese government for the soybean planting policy, domestic soybean production should rise sharply. However, driven by huge demand, China’s soybean imports will continue to maintain a high level, the sources of imports will be optimized, such as imports from Russia or Brazil.

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