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ISA sees strong demand for Iowa soybeans during China trip

By Jean Caspers-Simmet
simmet@agrinews.com

Date Modified: 04/11/2013 9:10 AM

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SHENZHEN, China —The message members of the Iowa Soybean Association got during a recent trip to China is that their customers want more soybeans and corn.

Participants in the March 16 to March 24 trip were Mark Jackson, ISA president and farmer, of Rose Hill; Brian Kemp, ISA president-elect and farmer, of Sibley; Kirk Leeds, ISA chief executive officer; and Grant Kimberley, ISA director of development. Iowa ag secretary Bill Northey also made the trip.

"We continue to see strong growth in livestock production," Leeds said during a conference call from Shenzhen. "Livestock production needs soybean meal from soybeans. We met with industry officials and feed millers and they see continued growth in expected demand for pork, poultry and aquaculture."

Even with all the news stories of an economic slowdown in China, many expect to see 5-8 percent annual growth in livestock production, Leeds said.

The group arrived in China not long after President Xi Jinping was sworn into office.

"The business community we've talked to expresses a lot of optimism about this leadership team," Leeds said. "They think there will be economic reforms and an overall friendly business approach."

Kimberley said he doesn't see soybean demand slowing down.

"The Chinese have an almost insatiable appetite for whatever soybeans are produced in the world market," he said.

Industry representatives in China are talking about soybean imports growing from 50 million metric tons last year to more than 80 million metric tons in the next three to five years. Next year alone they are anticipating soybean imports of 65 million metric tons.

"If you put that into bushels, imports will grow from 2.2 billion bushels to 3 billion bushels in the next three to five years," Kimberley said. "It just amazes us the amount of growth. They have a lot of mouths to feed and a huge demand for meat in their diet, and they need soybeans to do that."

Leeds said private sector officials in China told them they anticipate the country will be importing 30 million metric tons of corn within five years as well.

Kemp was struck by some of the environmental problems facing the country.

"As we departed our airplane in Central China, there was a sulfur haze over the land and a sulfur odor," Kemp said. "Another big story in the news is the dead, diseased hogs that farmers dumped into the river likely to avoid disposal costs. Since Shanghai uses the river for its public water supply, there has been a focus on environmental issues."

Kemp was amazed at the high regard in which Iowa producers were held during visits with soybean buyers.

"Face-to-face relationships are extremely important as we try to expand our markets," Kemp said. "As an Iowa farmer I really appreciate it when Chinese buyers travel to America and take time to learn about my operation. It works the same way as we travel around China."

Northey said that China is such a huge part of soybean demand in Iowa, the United States and the world, and that growth continues. It's "folks on the ground" talking about industry growth not official government reports, he said.

"When you talk about 5 to 8 percent and some even suggest 10 percent growth in some places, you are talking about large increases in some pretty big numbers," Northey said. "This market is driven by soybeans for soybean meal."

Kimberley said they met with companies that are heavily engaged in the aquaculture sector in southern China.

"Our best estimates are that aquaculture in China uses 480 million bushels of soybeans and is projected to grow to 680 million bushels by 2015," Kimberley said. "China has 75 percent of the world's aquaculture production. It's another big factor in the year over year growth of soybean demand in China."

There were concerns expressed about Brazil's port congestion slowing soybean shipments to China.

"It is important that we continue to invest in our infrastructure," Northey said. "We need to make sure that our infrastructure is such that we continue to deliver on time and be dependable."