Chinese traders play down impact of new animal feed guidelines on soy demand

Oilseed traders in China on Monday played down the potential impact on soy consumption of new government guidelines to lower the protein content of animal feed, saying that rising soymeal and soybean prices would be a far bigger curb on appetite.

The nation has been pursuing multiple ways to reduce its consumption of feed ingredient soymeal, made from soybeans, amid a festering trade war with the United States, its No.2 supplier of beans.

China, which typically buys about two thirds of globally traded soybeans to help feed its huge livestock herd, has been taking steps such as turning to alternative meals and reducing protein levels in feed.

China's Feed Industry Association on Friday approved new standards for feed for pigs and chickens, lowering the protein levels in pig feed by 1.5 percentage points and those for chickens by one percentage point, the agriculture ministry said in a statement that day.

The standards are only guidelines and the ministry did not say when they would take effect, with traders saying that prices would continue to be the key focus for soymeal consumers.

“The new standards are not enforceable (as they are based on guidelines),” said a soybean trader in China, declining to be identified due to the sensitivity of the matter.

Another trader, based in Beijing, said that most big feed mills were already using less soymeal than last year because prices had risen versus 2017. The most actively traded soymeal contract on the Dalian Commodity Exchange DSMcv1 has climbed 20 percent since the start of the year to record levels of more than 3,300 yuan ($474.37) per ton.