July 26, 2018 / 9:31 AM / 3 months ago

Trade war drives China to seek ways to cut soymeal in animal feed

BEIJING (Reuters) - China’s state planner has discussed ways of reducing soymeal levels in animal feed with top feed makers, sources briefed on the matter said, as Beijing tries to help its farmers cope with a protracted trade war with Washington.

The National Development and Reform Commission (NDRC) called the companies to a meeting in the Chinese capital on Wednesday, the two sources said. The discussions also looked at how to secure alternative protein-rich ingredients, they added.

Representatives of New Hope Group [NWHOP.UL], Beijing Dabeinong Technology Group Co Ltd, CP Group and Hefeng Group attended the meeting, one of the sources said.

A second source said the government was drafting new industry guidelines for animal feed and may cut recommended protein levels.

The new regulation may be released in August, he said.

The moves illustrate the government’s growing concern that the threat of hefty import tariffs on U.S. soybean supplies will limit availability of an important source of protein in livestock feeds and so drive up meal prices.

In the short-term, however, prices have actually fallen as worries about supply encouraged large arrivals of Brazilian beans and poor downstream demand led to record high soybean and soymeal stocks.

China’s soybean meal prices fell to around 3,000 yuan ($442.63) per tonne after climbing to a high point in early April.

This may hamper efforts to encourage farmers to cut soymeal and turn to alternative ingredients for animal feed.

“When prices of soymeal go up, feed producers will automatically adjust their ingredients. If prices keep being so low, it will be hard,” the second source said.

The sources declined to be identified as they were not authorized to speak to the media.

The NDRC did not respond to requests for comment.

On Friday, however, it posted an article on the popular WeChat messaging platform that stressed the availability of grain thanks to bumper harvests and the country’s increasingly diversified sources for imports.

It did not refer to the meeting, but the article underscores the government’s efforts to placate worries about supplies and outline moves to increase soybean imports from other countries to reduce its reliance on the United States.

Notably, the post did not mention the United States, the country’s second-largest foreign supplier of soybeans, in a section discussing imports of the oilseed.

“The main source of China’s soybean imports is Brazil, with shipments accounting for over half of China’s total purchases and increasing,” the state planner said.

“In addition, Russia, Ukraine, Kazakhstan, Argentina and other countries have great potential in their soybean production and exports to China,” it said.

CP Group did not respond to requests for comment on the meeting. Calls to Dabeinong and Hefeng went unanswered and New Hope declined to comment.

Reporting by Hallie Gu and Josephine Mason in BEIJING; additional reporting by Naveen Thukral in SINGAPORE; Editing by Jane Merriman and Richard Pullin

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