BOABC Viewpoint: China's approval to import Argentina soybean meal has limited impact on the domestic market in the short term

On September 17, the General Administration of Customs issued a notice allowing the import of Argentine soybean meal in accordance with relevant requirements. Argentine meal is expected to be shipped to China in early 2020.
 
Previously, China allowed only a small amount of soybean meal to be imported from India, Denmark, the United States, South Korea, the Netherlands and other countries. In 2018, China's soybean meal import volume was only 22,800 tons, less than 1% of China's soybean meal output. It is reported that a total of seven enterprises have been approved to export soybean meal to China, namely, Bunge Argentina, Argentina’s LDC, Cargill, Molinos Rio DE la Plata, Renova, T6 and COFCO Argentina.
 
In the short term, China's approval to import soybean meal from Argentina has limited impact on the domestic soybean meal market:
 
（1）China is the world's largest soybean crushing capacity and mainly relies on imported soybean. Soybean meal is mainly for domestic consumption.
 
（2）The Argentina soybean meal price is not advantageous. On September 28, the tax payment cost of imported soybean meal from Argentina was over 2,900 yuan/ton, and the domestic soybean meal price was around 3,000 yuan/ton. The two prices were almost the same, and Argentine soybean meal had no price advantage.
（3）Soybean meal is mainly used as feed raw material, and feed production requires high quality raw material. The transportation of Argentina soybean meal takes a long time. During the transportation, the physical and chemical properties of soybean meal may change, and the nutritional value will be lowered, which will affect its use.
 
（4）Due to the complicated approval procedures for importing soybean meal from Argentina, overseas enterprises need to apply for registration with the Ministry of Agriculture and Rural Affairs of China with the assistance of Chinese companies. Besides, African swine fever has led to significant drop of the domestic feed demand, which further resulted in the decrease of soybean meal demand.
 
In conclusion, we believe that the short-term impact of allowing Argentina soybean meal to be exported to China is limited, but a new source of soybean meal import is added to avoid domestic soybean meal shortage.