China’s soybean imports totaled 52.64 million tons in 2011, down from 54.80 million tons imported in 2010, according to the official data published last week by the Chinese General Administration of Customs. China’s soy imports appeared to decrease for the first time since 2004 due to increased soybean releases from state reserves, the government control on retail prices for edible oils and negative crushing margins for processing.

Dermot Hayes, Pioneer Hi-Bred International Chair in Agribusiness and economics professor at Iowa State, said Brazil may overtake the United States as the largest exporter to China because the U.S. has a comparative advantage in corn, while Brazil has an advantage in soybeans.

“Keeping a good trade relationship is good for both parties, but China would be better off importing meat,” Hayes said.

To strengthen cooperation with Brazil and reduce its dependency on U.S. soybeans, China has been launching various international projects since 2010. In one instance, Chongqing Grain Group Co., Ltd. — one of China’s largest state-owned grain corporations — publicized that it will invest $500 million to build a soybean industrial base in Brazil.

“With establishment of a comprehensive industrial chain including the processing, warehousing and logistics of soybeans, our purchasing cost for soybeans will be greatly reduced,” said Hu Junlie, president of Chongqing Grain Group.

Oil World, an independent forecasting service for oilseeds, oils and meals, said U.S. soybean producers and exporters suffered from the unprecedented competition from South America, and that record South American soybean disposals are seen as the major reason for reduced U.S. soybean crushing and exporting during September and October of 2011.

Other analysts predict that lower and unstable soybean future prices from the Chicago Board of Trade since mid-October won’t influence the China-U.S. trade pattern.

“Soybeans will not be a commodity in surplus because of the Chinese demand,” said Dan O’Brien, Kansas State University marketing specialist. “It seems likely that U.S. soybean supply-demand balances will remain historically tight for at least the next one to two years.”

It was reported that China’s self-sufficiency rate stands at about 22 percent now, and farmers are allowed only to plant non-GMO soybeans. Therefore, cheaper and high-quality U.S. genetically modified soybean supplies have caused a heavy blow to a large number of China’s processing plants leading them to bankruptcy. From another perspective, China’s domestic soybean pricing power has been controlled by international market, mainly the United States.

One Chinese government officer disclosed that international food businesses in 97 major Chinese oil companies own 66 percent of the total share capital. Currently, more than 75 percent of China’s oil market and oil supply side of raw materials and processing are under the control of Archer Daniels Midland, Bunge, Cargill and Louis Dreyfus.

Liu Denggao, vice president of the China Soybean Industry Association, said, “Having a self-sufficiency rate lower than 30 percent, in the soybean trade, we are literally putting ourselves at the mercy of others.”

Brazil, which last month supplanted Britain as the world’s sixth largest economy, had its best year in exports mostly due to competitive prices and strong demand for its agricultural and mineral products, according to the Centre for Economics and Business Research. In the first 11 months of the year, Brazil had surpassed the United States as the largest exporter to China, with exports up 6.8 percent on the year at 19.8 million tons, while the United States exported 18.75 million tons, up 0.24 percent.

Although the adverse weather in large parts of Argentina and South Brazil at the end of 2011 gives U.S. corn and soybean futures a chance to go bullish on prospects of lower production in South American, Brazil has been a close partner in soybeans.