CHINA'S demand for feed grain is set to rise, but it will look beyond soymeal, which currently makes up a large part of its feed ration, as its prefered feed stock.
The food security inspired Chinese government decision to cut down on the use of soymeal could represent an opportunity for Australia's canola sector, with China likely to look to alternative protein sources such as canola, cotton and sunflower meal.
According to a recent Rabobank report demand for livestock feed will rise from 450 million tonnes in 2021 up to 523m tonnes by 2030, but soybeans will make a smaller part of the ration.
Rabobank agricultural analyst Dennis Voznesenski said China was the world's largest importer of soybeans, accounting for over 60 per cent of global trade, with the majority of these inputs used in the livestock sector.
"In 2021 the Chinese ministry for agriculture and rural affairs issued guidelines to promote the reduction of soymeal use without consideration for animal growth rates and productivity," Mr Voznesenski said.
He said the government hopes to reduce the inclusion ratio of soymeal in feed from 15.3 per cent in 2021 to 12pc by 2030.
While seemingly a relatively modest drop, over the vast usage in China it represents a big chunk of alternative feed needed to fill the breach.
Not all the product required will come from imports.
The Chinese government is currently heavily promoting a policy to increase domestic soybean production to 23 million tonnes by 2025 - compared to 19.5 million tonnes in 2022.
Mr Voznesenski said this would be helpful but would not make up the full shortfall.
"An extra 3.5 million tonnes of domestically grown soybeans will be helpful but unlikely to fill the void of reducing soybean meal consumption from almost 70 million tonnes towards the low 60 million tonnes mark," he said.
He said Australia would definitely be in mix to pick up the slack, especially with key rivals such as Canada focusing on domestic opportunities.
"The possibility of gradually increasing canola demand from China by 2030 comes at the same time as Canada looks to finish the construction of 3.6 million tonnes of domestic canola crushing capacity by early 2024."
"The consequence is likely a considerable decrease in Canadian canola export availability and more export market share for Australia.
Mr Voznesenski said Australia could be in the enviable position of having two large buyers competing for product.
"Europe, currently accounting for approximately 90pc of Australia's canola export market, is looking to phase out palm oil as a biodiesel feedstock by 2030, again increasing demand for Australian canola."