It would not be a stretch to assert that Chinese imports have driven the recent growth in soybean production and exports by the U.S., Brazil and Argentina. Between 1995 and 2009, Chinese imports of soybeans grew by 1.459 billion bushels (from 0.029 to 1.488 billion) while the rest of the nations of world increased their imports by 0.183 billion bushels (from 1.168 to 1.351 billion).

China now imports 53% of all raw soybeans in world trade. While Brazil and Argentina have captured the lion’s share of the import growth, any change in the rate of growth in Chinese soybean imports would have serious price and production-growth consequences for the U.S., as well as Brazil and Argentina.

When it comes to decade-long growth rates the size of those recently experienced by Chinese soybean imports, it is always dangerous to extrapolate such rates years and decades into the future. In this case, it is likely even more dangerous to make continued high-growth assumptions because, well, because it is China we are talking about.

China’s imports of soybeans stand in contrast to its behavior in virtually all other major agricultural commodity markets. In the case of grains, China exports more than it imports, shipping between 1% and 2% of its major-grain crops out of port in 2009.

While not trying to suggest that we understand the spectrum of considerations that influence the behavior of the Chinese in agricultural markets, we do think it is important to understand the use of grains and soybeans in China.

Rice is one of the traditional mainstays of the Chinese diet and virtually all of the 136 million metric tons (mmt) of production (2009) is used either for food, seed or additions to carryover stocks. Less than 5% of China’s 115 mmt of wheat production is used for animal feed, with the rest used for food, seed and changes in carryover stocks.

Unlike rice and wheat, which are primarily grown for food, 75% of China’s 2009 corn production is projected to be used for feed with the rest divided up among food, seed, industrial and changes in carryover stocks.

In addition to the high use of corn for animal feed another difference between it and rice and wheat is the increase in production that has taken place since 1995.

In 1995, more rice was produced than either wheat or corn. In the years since then rice production has increased by 6 mmt to 136 mmt. During that same period wheat production increased from 102 mmt to 115 mmt in 2009.

Corn on the other hand has increased over that period by 43 mmt to 155 mmt in 2009 with the proportion of corn production used for animal feed increasing over time. Corn production now exceeds that of rice by 19 mmt.

Soybean production is significantly smaller than the three major grains coming in at 14.5 mmt just 1 mmt more than was produced in 1995. Over that period the use of soybeans for human food has increased 5.6 mmt to 8.8 mmt.

The use of soybeans for crush has increased from 7.5 mmt in 1995 to 44.1 mmt in 2009, an increase of 488%. Most of the meal that resulted from the crush was used for animal feed with the oil being used for human consumption, according to USDA statistics.

The increase in the use of corn and soybean meal for animal feed has supported a 38% and 68% increase in the production of pork and broilers, respectively, over the 1995-2009 period.

Looking over the last 15 years, the data suggest that the Chinese have focused on self-sufficiency in rice, wheat and corn production to the exclusion of soybeans. In addition, the data show that the Chinese have used increases in corn production and soybean imports to increase their production of pork and poultry, maintaining a near self-sufficiency in the production of those meats.

The future of soybean imports by China depends upon the willingness of its leaders to continue that pattern. Another key issue is whether or not the increase in Chinese imports will keep pace with net production increases – production in excess of domestic demand – in the U.S., Brazil and Argentina. Just as soybean producers have benefitted from increasing Chinese soybean imports over the last 15 years, they could face price pressures if future increases do not keep up with the growth in supply. A movement on the part of the Chinese to focus on increasing domestic soybean production could be problematic for the three major soybean exporters.

The data also suggest that a significant increase in the level of imports of pork and poultry would require a change in current public policy. U.S. pork and poultry producers hope changes in Chinese trade policies will result in larger markets for them. In the long term, if large quantities of U.S. pork and poultry are imported by China, it most likely will be because China believes it is in China’s long-run best interest to do so. Otherwise, not.

To us, the evidence is strong that – above all else – China takes care of China.