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Reshaping grain trade? China acts to change animal feed recipes

China issued guidelines on Wednesday recommending the reduction of corn and soymeal in pig and poultry feed, a measure that could reshape the flow of grains into the world’s top corn and soybean buyer.

Chinese feed makers have already been switching corn for cheaper alternatives, especially wheat, after the grain rallied by more than a third in the last year following a drop in corn output and state stockpiles.

Imports of corn, used largely in animal feed, into China surged as it sought to compensate for the domestic deficit.

The Ministry of Agriculture and Rural Affairs said in a statement on its website the new guidelines are aimed at improving the usage of available raw materials and creating a formula that better suits China’s conditions.

Greater feed use of wheat, which has more protein than corn, has also cut demand for soymeal.

The ministry said rice, cassava, rice bran, barley and sorghum were also suitable alternatives to corn, while rapeseed meal, cottonseed meal, peanut meal, sunflower meal, distillers dried grains, palm meal, flaxmeal, sesame meal and corn processing byproducts were good options to replace soymeal.

The guidelines may only impact those firms that had not kept up with the trend towards substitution, Li Hongchao, senior analyst at trade website Myagric.com, said.

However a wheat products trader said it could have “a significant impact.”

“Many feed producer clients are still using quite a bit corn. They have reduced the usage but haven’t cut off corn completely,” he said, declining to be named because he was not authorized to speak with media.

The ministry also provided some suggested feed formulations depending on the region of the country.

Those included reducing corn by at least 15% in pig diets in Northeast China by using rice and rice bran, or using sorghum, cassava flour, rice bran meal and barley to replace corn in pig feed in southern China.

In some regions, it recommended eliminating soymeal completely and replacing it with other meals.
Source: Reuters (Reporting by Dominique Patton and Hallie Gu; Editing by Jacqueline Wong and Barbara Lewis)

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