Soybean Output Seen Rising With More Acreage

Soybean Output Seen Rising With More Acreage

Gold Silver Reports — China’s top corn producing province of Heilongjiang, plans to switch 80 percent of his land to cultivate soybeans this year as the government ends a near decade-old corn price support scheme.

China announced last week it will stop its corn stockpiling programme and allow markets to set prices – a move that should transform the agricultural landscape as farmers shift to more lucrative crops like soybeans, rice and peanuts.

Rising demand for a protein-rich diet in China has since 2001 triggered a six-fold jump in imports of soybeans, which are crushed to make soymeal, an animal feed ingredient, and cooking oil.

Higher output in China, the world’s top soybean importer, will hit farmers in top producers Brazil, the United States and Argentina. The trio have presided over a soybean boom, helping nearly double world production over 15 years.

“We calculated and to grow soybeans would give better returns than corn which gives no profit after the price drop,” said Wang, who has grown only corn on his 6.7 hectare (16.5 acre) farm for years in Hule village in Heilongjiang.

“Soy prices have picked up and with government soy subsidies, we may be able to make 700 yuan-800 yuan ($108-$124) per hectare,” said Wang, adding that around a third of farmers in his village had plans to shift to soy.

Wang said farmers did not know what subsidies Beijing would provide instead of a guaranteed price if they grew corn, but he was confident corn prices would fall.

In 2016, China’s soybean output is expected to rise by up to 2 million tonnes and increase faster in future years with improved seed technology and a bigger acreage, analysts and traders said.

“Many farmers plan to shift to grow rice and peanuts, about 10 percent of the farmland would be shifted to soybean,” said Wang Fuqing, head of the Hule Modern Agricultural Machinery Cooperative.

China’s support for corn saw the area under cultivation hit 37 million hectares last year, up from 23 million hectares in 2001, according to U.S. Department of Agriculture data.

In contrast, soybeans was grown on 6.8 million hectares in 2015, down from 9.3 million hectares 15 years ago.

“We know that soybeans and corn compete for acreage, so China’s support for corn prices pushed all those soybean acres into corn as it made more profit to grow corn,” said Adam Davis, head of commodities at Merricks Capital, a Melbourne-based agricultural fund.

“If it goes back to free market you could certainly see acreage go back to soybeans.”

Farmers are expected to make a bigger shift next year as corn falls nearer international prices. Corn has traded at an almost 50 percent premium to world prices in China.

A shift of one to two million hectares to soybeans from corn would be the equivalent of a month’s soybean imports for China, said Ken Morrison, a former Cargill executive who publishes a commodity newsletter.

“I think the attention to the impact on global corn is overdone, and I think the attention to the implications of what it will mean to Chinese soybean production is under appreciated,” Morrison said.


China, which ended price support for cotton in 2014, is forecast to see cotton acreage decline to 3.4 million hectares in 2015/16 from 5.5 million hectares in 2011/12, USDA data shows.

Cotton imports have dropped while the gap between international and domestic prices has narrowed since Beijing stopped paying prices well above the global market.

There could also be scope to improve soybean yields, including by using genetically modified organisms. Though Beijing has been cautious so far, ChemChina’s $43 billion purchase of Swiss seeds and pesticides company Syngenta could bring Chinese planting of GMO soybeans closer.

China produces 1.8 tonnes of soybeans per hectare, well below the 3.2 tonnes of output in the United States.

Boosted by GMOs, annual global soybean output has jumped nearly two-and-half times to 319 million tonnes since 1980.


A move to liquidate massive corn stockpiles will also disrupt meal and vegetable oil trading in China and Asia, said grains analyst Roy Huckabay at Chicago brokerage the Linn Group.

China is sitting on close to 250 million tonnes of corn, enough to fill Beijing’s Bird’s Nest stadium around 34 times.

If lower quality grain from state reserves is processed for ethanol, the market would be flooded with byproduct distillers dried grains with solubles, he said.

Some farmers were taking a cautious approach before switching crops, said a local government official at Tailai county in Heilongjiang. — Neal Bhai Reports

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Neal Bhai has been involved in the Bullion and Metals markets since 1998 – he has experience in many areas of the market from researching to trading and has worked in Delhi, India. Mobile No. - 9899900589 and 9582247600

3 thoughts on “Soybean Output Seen Rising With More Acreage”

  1. कमोडिटी में भी इक्विटी की तर्ज पर निवेश होता है और कई तरह की कमोडिटी में ट्रेडिंग होती है। कमोडिटी ट्रेडिंग में एग्री और नॉन-एग्री कमोडिटी शामिल है। नॉन-एग्री कमोडिटी में प्रेशियस मेटल और बेस मेटल शुमार है। कमोडिटी और इक्विटी में फंडामेटल ट्रैक करने के तरीके अलग हैं। इक्विटी में कंपनियों के परफॉर्मेंस और सेक्टर के फंडामेंटल पर नजर रखी जाती है। वहीं कमोडिटी में फंडामेंटल मसलन उत्पादन, पैदावार, मौसम, मांग-सप्लाई और टैक्स को देखा जाता है।

    • कमोडिटी में निवेश रिस्क लेने की क्षमता, निवेश की अवधि और रिटर्न की उम्मीद पर निर्भर होता है। कई कमोडिटी में रिटर्न ज्यादा है लेकिन जोखिम भी बहुत ज्यादा है। कई कमोडिटी में सीजन के हिसाब से उतार-चढ़ाव पर निवेश निर्भर होता है। कमोडिटी में कारोबारी अक्सर लंबी अवधि का निवेश करते हैं। कमोडिटी में कॉरपोरेट भी लंबी अवधि का निवेश करते हैं। कुछ निवेशक ट्रेडिंग भी करते हैं। कई निवेशक हफ्ते से लेकर कुछ महीने तक निवेश करते हैं।

      • देश में कई कमोडिटी एक्सचेंज मौजूद हैं और सारे एक्सचेंज सेबी से रेगुलेट होते हैं। कमोडिटी में लिक्विडिटी के आधार पर एक्सचेंज का चुनाव करना चाहिए। एक्सचेंज में वॉल्यूम का भी ख्याल रखें। देश में 3 एक्सचेंज एनसीडीईएक्स, एमसीएक्स और एनएमसी प्रमुख हैं। हर एक्सचेंज में ट्रांजैक्शन चार्ज अलग है और आप एक से ज्यादा एक्सचेंज में ट्रेडिंग कर सकते हैं। हर एक्सचेंज की हर कमोडिटी में महारत नहीं है, लेकिन ब्रोकर के जरिए एक्सचेंज का चुनाव आसान होता है। रजिस्टर्ड ब्रोकर के पास ही जाएं और रिसर्च मुहैया कराने वाले ब्रोकर को चुनें। निवेशक को खुद भी रिसर्च करनी चाहिए।

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