The pools hold a swill of cheaper, locally sourced ingredients, which can include brans, pumpkin vines and wine lees. But it is fermented – like yogurt – so the proteins are already broken down and easy to digest, lessening the need for the higher-quality proteins in soy, 80 per cent of which China imports.

For the farm’s owner, 47-year-old Gao Qinshan, the motivation is entirely monetary. Feed accounts for 70 per cent of pig rearing costs, and soybean prices have jumped – squeezed by Beijing’s trade stand‑off with Washington and compounded by war in the Middle East.

“Soybean prices have become so unstable,” Gao lamented.

With the industry already hobbled by oversupply and weak consumer demand, “pig farming has become unprofitable,” he said. “Everyone is thinking about how to cut costs.”

Beijing moves to deploy new feed, technology

The grassroots fixation on overheads belies Beijing’s more strategic motivations: long‑term food security and increased self‑reliance.

The government sharply accelerated a drive to expand protein sources for livestock in March of last year, just as trade tensions ramped up early into President Donald Trump’s second term. Soybeans quickly became a key bargaining chip.

Reuters interviews with dozens of livestock and feed producers, state researchers and industry experts revealed Beijing is moving faster than previously thought to deploy new technologies and promote fermented feed.

It’s the agricultural equivalent of Beijing’s campaign to build domestic capabilities in microchips and artificial intelligence, catalyzed by Washington’s stringent controls on advanced technology exports to China.

In terms of agriculture, “the biggest national policy goal right now is soymeal reduction,” said Fu Zhenzhen, a feed analyst at Beijing Orient Agribusiness Consultants.

“The most direct reason for that is the trade war with the United States,” she said. “Fermentation is essential.”

Motivating farmers to switch

China is the world’s biggest buyer of soybeans, and imported $52.7 billion (C$73.3 billion) of the oilseed in 2024, $12 billion of which came from the U.S., the latest figures from the World Bank show.

Last year, inbound shipments increased 6.5 per cent from 2024 to a record 111.8 million metric tons, according to Chinese customs data.

Fermented feed currently accounts for eight per cent of industrial feed in China, up from three per cent in 2022, and is likely to hit 15 per cent by 2030, industry experts predict. That could help China cut soybean imports by up to 6.3 per cent from last year’s levels, according to Reuters calculations.

Pig farmers are just one piece of Beijing’s food security puzzle, albeit an important one, with pork a traditional staple of the Chinese diet — China is home to half the world’s pigs — and swine more dependent on soymeal than poultry or cattle.

Farms like Gao’s raise a third of livestock in China, the world’s biggest meat producer.

However, the switch to fermented feed requires a heavy commitment, often entailing the overhaul of entire feeding systems. Gao struggled initially, with feed growing mould and going to waste. Many farmers simply give up.

Beijing, characteristically, is leaving nothing to chance, offering incentives to every sector of the industry, and every link in the supply chain.

Targeting the entire supply chain

China’s Muyuan Foods, the world’s biggest pig farmer, has reduced soymeal in its feed from 10 per cent six years ago to 7.3 per cent now by using synthetic amino acids produced from fermented corn starch, Zhang Meng, director of the company’s feed division, told Reuters.

Agribusiness giant New Hope has developed soymeal-free chicken and duck feeds by fermenting duckweed and other cheap protein sources, according to people familiar with the matter. New Hope did not reply to a Reuters request for comment.

Working with the government, China’s two biggest dairy producers, Yili and Mengniu, have cut the amount of soymeal in cattle feed by 20 per cent, according to sources at the state-backed National Center of Technology Innovation for Dairy. Yili declined to comment, and Mengniu did not reply to a request for comment.

All of the figures on soymeal reduction are being reported for the first time.

China has also attracted foreign investment, with Dutch-based trading house Louis Dreyfus planning to build its first fermented feed production line in the northern port city of Tianjin.

“China is standing at the forefront of fermentation technology,” said Shambhu Nath Jha, principal consultant at Fact.MR.

The U.S.-headquartered consultancy estimates that the value of China’s fermented feed market vaulted to $6 billion (C$8.3 billion) last year, catching up fast on Europe’s leading but more mature market, worth $7 billion. The U.S. market, by contrast, is worth just $2.5 billion, because soybeans and corn are more readily available.

For poultry, China’s 25 per cent fermented feed adoption rate already surpasses Europe’s 20 per cent, according to Fact.MR.

Costs, complexity and taste

Beijing has momentum on its side: Pork prices at 16-year lows make any cost-reduction scheme an easy sell.

Where the fermentation pitch runs into problems is the lack of a standardized approach, analysts said.

Some argue that pigs mature more slowly if farmers simply ferment whatever food sources are available, and can be weaker to disease.

The ultimate test may be taste.

“There is so much demand from consumers for better quality meat, but the industry is just focused on reducing costs and doing what the government wants,” said Ian Lahiffe, an agriculture consultant in Beijing.

“There are a lot of benefits to feeding soybeans,” he said. “They need to think about how to avoid sacrificing animal health and meat flavour.”

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The decision aims to ensure adequate supply during peak agricultural demand, the China Agricultural Means of Production Association said in a statement, instructing storage firms to sell reserves to support orderly trading and stabilize prices.

“This year’s release is at least 15 days earlier than previous cycles. Some farmers in Henan and Shandong have been complaining about phosphate fertilizer shortages in recent days,” said a Beijing-based fertilizer analyst, who asked not to be named due to the sensitivity of the matter.

The release includes nitrogen, phosphate and compound fertilizers. China’s fertilizers are normally released once a year before spring plowing season.

Early emergency releases are usually launched in the event of market shortages or price fluctuations, the analyst said.

China restricting exports

The early drawdown of reserves follows a series of warnings from state-linked industry bodies urging producers not to hoard supplies or raise prices as farmers across the country prepare for spring planting.

The closure of the Strait of Hormuz has shut down regional fertilizer plants and severely disrupted shipping routes, threatening supplies to key global importers like India as farmers in the Northern Hemisphere gear up for planting.

The global fertilizer market was already tight, with China restricting exports this year to secure domestic supply, analysts said.

China, the world’s largest producer of urea – a nitrogen-based fertilizer – tightly controls exports via quotas and has issued no permits for shipments this year.

A prolonged conflict in the Middle East could reduce global output, although China remains on track to produce a record 76.5 million tons of urea this year, the China Nitrogen Fertilizer Industry Association said.

— Reporting by Daphne Zhang, Ethan Wang and Lewis Jackson

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The State Council’s “No. 1 document” comes as China prepares its next five-year plan amid trade friction with major food suppliers such as the U.S. and Canada, alongside a domestic economic slowdown and climate challenges.

Although China recorded record grain output last year, it remains heavily reliant on imports. Trade tensions, particularly with the U.S., have accelerated efforts towards self-sufficiency, including investments in machinery and seed technology.

Diversification push

The No. 1 document mentions diversification three times, up from once in 2025, highlighting plans to expand oilseed supplies, diversify the food system, and broaden agricultural imports.

China’s push to diversify agricultural imports could cut reliance on traditional exporters and expand trade with the Global South, said Even Rogers Pay, director at Beijing-based consultancy Trivium China.

“(The increased emphasis on diversification) tells us central policymakers increasingly view diversification as a strategy to make China’s food system more secure, and more resilient when shocks like natural disasters or trade wars occur,” Pay said.

On soybeans, the plan shifts from consolidating expansion gains in 2025 to consolidating and enhancing production capacity, signalling a greater focus on yield and quality rather than planting area, she said.

Beijing has been cutting reliance on U.S. soybeans — which are processed into feed for China’s large pig herd — since the first trade war, while boosting domestic production to bolster food security. U.S. soybean market share in China fell to 15 per cent in 2025, down from 41 per cent in 2016.

Agri-tech innovation

China plans to foster internationally competitive agricultural enterprises, support the expansion of key and specialty agricultural exports, crack down on agricultural product smuggling, and engage in global agricultural and food governance, the document said.

It also outlines measures to boost agricultural innovation, including strengthening research platforms, backing leading agri-tech firms, advancing industrialized biotech cultivation, integrating AI with farming, and cultivating specialized agricultural talent.

Stabilizing meat sector

China aims to strengthen pork production management, support beef and dairy sectors, and promote dairy consumption, the document said.

The meat sector has been hit by oversupply and low prices, squeezing producers’ margins. The government has rolled out measures to stabilize the industry, including a quota system on beef imports and tariffs on EU dairy products.

— Reporting by Beijing Newsroom, Ella Cao and Lewis Jackson

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Following a trade truce in late October, China has stepped up purchases of U.S. cargoes, with traders saying that more than 7 million metric tons have been purchased since then.

In late November, Reuters reported, citing a shipping schedule, that two cargo vessels would carry the first U.S. soybean shipments to China since May.

As these cargoes have not yet arrived, they do not appear on the customs website.

Argentina, Brazil imports jump

U.S. soybean imports fell to zero in November from 2.79 million metric tons a year earlier, data from China’s General Administration of Customs showed on Saturday.

Arrivals from Brazil jumped 48.5 per cent year-on-year to 5.85 million tons, accounting for 72 per cent of total imports, while shipments from Argentina rose 633.6 per cent to 1.78 million tons, or 21.9 per cent of the total.

The world’s top soybean buyer imported 8.11 million metric tons in November and 103.79 million tons in the first 11 months, putting full-year arrivals on track for a record amid strong purchases from South America and a trade truce with Washington.

From January to November, China imported 76.7 million tons from Brazil, up seven per cent year-on-year, and 6.24 million tons from Argentina, up 62.5 per cent year-on-year.

U.S. soybean imports fell 5.9 per cent year-on-year to 16.82 million tons from January to November.

Sinograin held three auctions this month to make room for U.S. soy arrivals.

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Why it matters: Canadian farmers currently face punitive Chinese tariffs on canola.

The most-active rapeseed meal futures CRSM cv1 on the Zhengzhou exchange climbed 4.23 per cent to close at 2,491 yuan (C$491.97) per metric ton – the biggest daily rise since August 13, 2025.

According to Bloomberg, Carney said on Saturday that immediate action to reduce Chinese tariffs on Canadian goods, such as canola, was never a realistic outcome for the meeting.

“There is little sign that relations between China and Canada have improved, which is supporting the rise in canola prices,” said Zhang Deqiang, an analyst at Shandong-based Sublime China Information.

In September, China extended its investigation into Canadian canola imports, granting another six months for negotiations aimed at easing a year-long trade dispute triggered by Ottawa’s tariffs on Chinese electric vehicles.

Beijing, the world’s largest importer of canola, imposed preliminary duties of 75.8 per cent on Canadian canola seed imports in August. A final ruling could result in a different rate, or overturn the decision.

Canada, the world’s largest exporter of canola, shipped almost C$5 billion of canola products to China in 2024, about 80 per cent of which were seed. The steep duties on canola seed, if they remain in place, would probably all but end those imports.

Canola is crushed to produce cooking oil and other products. The meal left behind in the crushing process is used as livestock feed.

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The provisional rate will be set at 75.8 per cent, effective from Thursday, the Ministry of Commerce said in a statement.

Canola Council of Canada President Chris Davison said that rate makes the Chinese market effectively closed for Canadian canola, to which Canada exported almost C$5 billion of the oilseed crop in 2024.

ICE November canola futures RSX5 fell as much as 6.5 per cent to a four-month low after the announcement.

“This really came as a surprise and a shock,” said trader Tony Tryhuk of RBC Dominion Securities.

Duties could all but end canola imports

China, the world’s largest importer of canola, also known as rapeseed, sources nearly all its supplies of the product from Canada. The steep duties would likely all but end imports if they are maintained.

“This is huge. Who will pay a 75 per cent deposit to bring Canadian canola to China? It is like telling Canada that we don’t need your canola, thank you very much,” said one Singapore-based oilseed trader.

China imposed tariffs on canola oil and meal in March.

Canada is now in a trade conflict with the world’s two largest economies, as it also faces tariffs on goods from the United States. Canada’s number one canola market is the U.S., followed by China.

China’s Ministry of Commerce said an anti-dumping probe launched in September 2024 had found that Canada’s agricultural sector—particularly the canola industry—had benefited from substantial government subsidies and preferential policies.

The Canadian government and canola industry have previously rejected allegations of dumping. The industry believes China’s complaint is based on other ongoing trade and political disputes, Davison said.

A final ruling could result in a different rate, or overturn Tuesday’s decision.

The decision marks a shift from the conciliatory tone struck in June when China Premier Li Qiang said there were no deep-seated conflicts of interest between the countries during a phone call with Canadian Prime Minister Mark Carney.

“This move … will put additional pressure on Canada’s government to sort through trade frictions with China,” said Trivium China agriculture analyst Even Rogers Pay.

Canada’s trade, agriculture and prime minister’s office did not immediately respond to request for comment.

Canada has imposed tariffs on Chinese electric vehicles, steel and aluminum.

Separately, China also launched an anti-dumping investigation into Canadian pea starch and imposed provisional duties on imports of halogenated butyl rubber, according to ministry statements.

No easy replacement

Replacing millions of tons of Canadian canola is likely to be difficult at short notice, say analysts.

China uses imported canola to make animal feed for its aquaculture sector, as well as for cooking oil.

The move provides an opportunity for Australia, which looks set to regain access to the Chinese market with test cargoes this year after a years-long freeze in the trade, Pay said.

Australia, the second-largest canola exporter, has been shut out of the Chinese market since 2020 due mainly to Chinese rules to stop the spread of fungal plant disease.

However, even if Australian imports increase, “fully replacing Canadian canola will be very difficult unless import demand drops sharply”, said Donatas Jankauskas, an analyst with commodity data firm CM Navigator.

Davison said his industry believes China will need Canada’s canola to meet the sort of demand it has experienced in recent years.

“I think the expectation would be that they could not meet those needs with a quality of a product and the volume that we provide,” Davison said.

Canadian farmers take hit before harvest

Canadian farmers are about to begin harvesting canola and will not be happy to see prices plunge, said Canadian Canola Growers Association President Rick White. As long as the prohibitive duty is there farmers face suppressed prices.

“It’s going to certainly have a damping effect on price for farmers and they’re going to be stuck with that,” White said.

Commodity funds have a substantial long position in ICE canola futures, traders said, which should add fuel to the selloff fire.

“This will help accelerate their exit of that long and could really extend the losses,” said Tryhuk.

Another trader said there was already downward pressure coming into canola prices as Canada’s crop is widely believed to be bigger than many previously forecast due to good weather.

Ventum Financial broker David Derwin said traders were unsure about how to take the Chinese move yet, since it is not a final rule.

“Is it a negotiating tactic? Or does China put it in and that’s that?,” Derwin asked.

—Additional reporting by Gus Trompiz in Paris and Ed White in Winnipeg

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In a late night post on Truth Social, Trump said China was worried about a shortage of soybeans and he hoped it would quickly quadruple its soybean orders from the U.S.

“Rapid service will be provided. Thank you President XI,” Trump said in his post.

Markets respond

The most active soybean contract on the Chicago Board of Trade (CBOT) Sv1 jumped 2.38 per cent to US$10.11 a bushel early Monday after Trump’s post. The contract was steady earlier.

China, the world’s largest soybean buyer, imported roughly 105 million metric tons last year, just under a quarter coming from the U.S. and most of the remainder from Brazil. Quadrupling shipments would require China to import the bulk of its soybeans from the U.S.

“It’s highly unlikely that China would ever buy four times its usual volume of soybeans from the U.S.,” said Johnny Xiang, founder of Beijing-based AgRadar Consulting.

Unclear if soy condition for tariff truce

A tariff truce between Beijing and Washington is set to expire on August 12, but the Trump administration has hinted that the deadline may be extended. It is unclear if securing China’s agreement to buy more U.S. soybeans is a condition for extending the truce as Trump looks to reduce China’s trade surplus with the U.S.

China’s soymeal futures DSMcv1 fell 0.65 per cent to 3,068 yuan per metric ton (C$588.75) on expectations U.S. imports could increase supply.

China’s Ministry of Commerce did not immediately respond to a Reuters request for comment.

Under the Phase One trade deal signed during Trump’s first term, China agreed to boost purchases of U.S. agricultural products, including soybeans. However, Beijing fell far short of meeting those targets.

China looking elsewhere

This year, amid Washington–Beijing trade tensions, it has yet to buy any fourth quarter U.S. beans, fuelling concerns as the U.S. harvest export season approaches.

“On Beijing’s side, there have been quite a few signals that China is prepared to forego U.S. soybeans altogether this year, including booking those test cargoes of soymeal from Argentina,” said Even Rogers Pay, an agricultural analyst at Trivium China.

Reuters previously reported that Chinese feedmakers have purchased three Argentine soymeal cargoes as they aim to secure cheaper South American supplies amid concerns about a possible soybean supply disruption in the fourth quarter.

U.S. soybean industry has been seeking alternative buyers, but no other country matches China’s scale. Last year, China imported 22.13 million tons of soybeans from the U.S., and 74.65 million tons from Brazil.

— Additional reporting by Kevin Yao

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Home to half the world’s pigs, China’s massive hog sector struggles with a supply glut amid weak consumer demand.

Why it matters: China has been a key export market for the Canadian pork industry.

Data shows China’s sow herd hit 40.43 million head at the end of June, above the normal holding level of 39 million.

Cash hog prices, meanwhile, have tumbled below 14 yuan (C$2.68) per kilogram this week. A year earlier, it was around 20 yuan, according to consultancy MySteel.

The upcoming meeting will also focus on curbing “secondary fattening” – a speculative practice of further fattening pigs in anticipation of higher prices – and tightening controls on slaughter weights, according to the notice from the China Animal Agriculture Association, the official animal husbandry association.

The story was first reported by Bloomberg News.

Reuters reported in June that a crackdown on secondary fattening was already underway to stabilize the market.

In July, the agriculture ministry said the country would reduce breeding sow stocks, control slaughter weights, and limit new production capacity.

These efforts are also expected to reduce soymeal consumption, as China contends with ongoing trade tensions with the U.S. and concerns over potential soybean supply disruptions in the fourth quarter.

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At a Wednesday meeting with major hog producers, the Ministry of Agriculture and Rural Affairs (MARA) said the country would reduce the number of breeding sows, control the slaughter weight of hogs and curb new production capacity.

Why it matters: China is a key export market for Canadian pork.

The move comes as authorities ramp up efforts to address overcapacity across multiple industries – an ongoing challenge that has fuelled domestic deflation and triggered trade barriers abroad.

“The drop is driven in part by yesterday’s meeting focused on controlling hog production capacity, which is expected to limit future soymeal consumption,” said Wan Chengzhi, an analyst at Capital Jingdu Futures.

Rapeseed meal and soybean meal futures fell on Thursday following the news. Rapeseed (canola) meal is often used as a substitute for soybean meal in animal feed.

China’s hog sector continues to grapple with oversupply amid sluggish consumption demand.

Cash hog prices have hovered below 15 yuan (C$2.86) per kilogram in recent weeks, down from around 21 yuan last August, according to consultancy MySteel.

“Slaughterhouses have been actively pushing prices down, and with the current off-season in consumption, prices have continued to weaken,” said Pan Chenjun, a senior animal protein analyst at Rabobank in Hong Kong.

Data showed China’s sow herd stood at 40.43 million heads at the end of June, above the normal holding level of 39 million.

Supply is expected to remain elevated in the second half of the year, Pan said.

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The world’s largest soybean buyer brought in 12.26 million metric tons in June, up 10.35 per cent from 11.11 million tons a year earlier.

Why it matters: Trade tensions with the U.S. may be pushing China to buy more soybeans from Brazil and avoid U.S. soy.

“June’s import surge was fuelled by a strong Brazilian harvest and increased buying of Brazilian beans amid ongoing China-U.S. trade tensions,” said Wan Chengzhi, an analyst at Capital Jingdu Futures.

According to shipping data provider Kpler, China imported 9.73 million tons of soybeans from Brazil in June, while shipments from the U.S. totalled just 724,000 tons. Official origin data is expected to be released on July 20.

Wang Wenshen, an analyst at Shandong-based Sublime China Information, said that strong profits from earlier high spot prices for soybean meal also encouraged more buying.

In the first half of the year, China imported a total of 49.37 million metric tons of soybeans, up 1.8 per cent from a year earlier, the General Administration of Customs data showed.

Soybean arrivals in China for July are expected to total 10.48 million metric tons, compared with 9.85 million tons a year earlier, based on average estimates from one trader and two analysts.

“Recent data shows Brazil’s weekly shipments remain high, reinforcing expectations of strong soybean imports into China through July and August,” Wan said.

“China has not yet purchased any fourth-quarter U.S. soybeans, with buying decisions likely hinging on the outcome of future China-U.S. trade talks.”

— Reporting by Ella Cao and Lewis Jackson

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