The chart below shows the steady and rapid annual increase in China's annual usage of all oilseeds oils (vegetable oils), used primarily for cooking meats and other foods in the country. The total usage is divided into three components--the oil imported as oil (mainly palm oil), the oil crushed from imported whole oilseeds (mainly, but not exclusively, soybeans), and the oil crushed from domestically grown oilseeds (including soybeans, rapeseed, peanuts, and others).

 

As can be seen, the domestic component of the vegetable oil total stopped increasing about twenty years ago, and today provides no more than 20 percent of overall usage. In other words, as I argued in Note #3 of this series, China is remarkably "import dependent" on the rest of the world for a key ingredient of its food supply, namely vegetable oil for cooking and food preparation. The sources of the other 80 percent are roughly 20 percent from Southeast Asia (palm oil), and 20 percent each for Argentina, Brazil, and the USA (all as whole soybeans).

 

Officials and researchers seem to publicly ignore this fact, and several questions arise:

 

(1)Is the "food oil" demand in China so strong that a constant annual increase of whole soybeans can be reliably assumed, in the range of 3 to 4 mmt per year, quite apart from the need for oilseed meals for meat production?

(2)Can/will China take steps to lessen this oilseed import dependency by means of incentivizing a greater portion of its crop acreage to soybeans and other oilseeds?

(3)How does the country's oilseed situation affect its politics versus the exporting regions mentioned above, or does it?

(4)What about the building tensions in the South China Sea--should we worry that the oilseed trade could be interrupted, as we do with energy trade in the Persian Gulf?

(5)And finally, will future economic growth in China be adequate to keep the oilseed demand headed up, as now, and for how long?

Politics, Truth, and Opinion.  A columnist observed last week, "Nobody has any idea what will happen between now and 2020, in the Republican Party, American politics or the world at large." Commercial traders and planners would surely say amen.