China will drive global demand, prices and profitability for soybeans as the country’s population, per capita gross domestic product, affluence, urbanization and meat consumption continue to grow.

That was the consensus of Renault Quach of Dongling Grain & Oil Co., China, and Sterling Liddell, vice president for Rabo AgriFinance in remarks Nov. 15 at soybean profitability summits in Cedar Falls and Ames. More than 125 farmers attended the meetings sponsored by the Iowa Soybean Association and Rabo AgriFinance.

“China’s population is nearly 1.3 billion and every year, it increases by more than 8 million people,” says Quach. “As the population grows, so does the size of our cities and consumer appetite for protein. Can we grow enough soybeans and corn and produce enough protein domestically to meet this demand? The answer is ‘no.’”

Expansion of meat and poultry production and consumption in the country isn’t feasible, he says, without a continued 4-5 percent increase in industrial feed production. That will require the import of more raw commodities and that bodes well for soybean farmers in the United States and Brazil.

In 2011, feed production in China totaled 169 million metric tons (mmt), including more than 40 mmt of soymeal. The upward trend in feed output mirrors increases in meat production – from 80 mmt today to a projected 86 mmt by 2015.

“We need a lot of soybeans to be crushed to meet the needs of local markets,” says Quach. “Yet China’s soybean production remains relatively flat as profit margins for domestic growers remain slim and the most productive farmland is devoted to other uses.”

Quach expects China to import more than 60 mmt of soybeans next year, a 3-4 mmt increase from this year. In comparison, Iowa’s annual soybean production totals 13-15 mmt.

Liddell, who monitors global ag trends and markets including developments in China and South America, says the profitability of Iowa soybean farmers is closely tied to what happens in population centers far away from the state’s productive soil.

“China, India and Indonesia alone represent 40 percent of the world population,” he says. “Global population and consumption growth is tremendous yet yield improvements are not keeping pace.”

Liddell urges soybean farmers to keep an eye on several critical moments during the next several months including the December stocks report, January’s acreage adjustment and weather conditions in Brazil.

“Soybean prices are likely to respond positively if the December stocks report is lower than expected and we see downward adjustments in January’s acreage report,” he says. “These trends will take on added importance if Brazil encounters adverse weather conditions.

“Weather extremes have a bigger impact than ever before,” Liddell adds. “Already there are some delays in planting in Brazil so further weather concerns certainly warrant attention.”

Liddell says China has systematically changed how Iowa soybean farmers must operate as the country transitioned from a marginal to dominant soybean importer in less than a decade.

“Chinese policy dictates market price, not just for China, but what happens in the United States and around the globe,” he says. “By understanding the fundamentals and realities in China, you can more effectively market your soybean crop and manage risk.”