China has slowly increased its imports of U.S. soybeans this year, underscoring how Beijing is gradually ramping up domestic production thanks to policy support. “The improving trend in food self-sufficiency reflects China’s efforts in energy and chip security,” Goldman Sachs analysts said in a Dec. 9 report on trends in Chinese agricultural stocks. Key Chinese government policy documents have emphasized the need to support domestic agriculture, especially in recent years. Soybeans are particularly important as a major ingredient in livestock feed. Goldman analysts expect China to be able to significantly reduce its need for imported soybeans thanks to fundamental improvements in arable land and management of feed demand. Specifically, they predict that China’s corn and soybean yields could jump from about 50% today to 80% to 85% of those in the United States by 2035, while reducing soybean content in animal feed by 25%. This is a big change, considering that China is the world’s largest soybean importer and was the largest purchaser of U.S. soybeans until it suspended purchases for much of this year due to escalating trade tensions. After the two countries reached a trade ceasefire in October, China resumed purchasing U.S. soybeans, but so far at lower volumes than originally expected. China has “stabilized its dependence” [grain] “Imports are increasing for the first time in 20 years,” Goldman analysts said, “and now they may be reversing course or building the capacity to reverse course.” Analysts also pointed out that China’s average annual public sector spending on agricultural research and development reached $6.6 billion from 2019 to 2021, five times more than 20 years ago and higher than in major peer countries. The target price for Shenzhen-listed Dabeinong is 7.5 yuan ($1.06). “Seeds are the ‘chips’ of food production, and their quality and characteristics directly affect the yield,” said analysts, who predict that Dabeino’s dominance in domestic biotech seeds will give the company great potential in the genetically modified crops market. Goldman begins coverage of China’s largest agricultural tractor maker, with 2024 sales expected to reach HK$14 ($1.80). “Given China’s shift to agricultural modernization to achieve food security, we see First Tractors as able to capture the structural growth opportunities presented by China’s trends in tractor upsizing (to high-horsepower tractors) and upgrading (towards intelligent tractors),” the report said. Slow-release fertilizer producers and product upgrades: Shanghai-listed Yunnan Yuntianhua with a target price of 45 yuan Equity analysts also started reporting that Yunnan Yuntianhua is the top fertilizer producer, accounting for 10% of the domestic market and 20% of the fertilizer input market. from 2025 to 2030,” analysts said, noting that the company has the highest dividend yield among Chinese agricultural stocks.
