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China's record soybean demand forecast to support prices till 2022: sources

Increase font size  Decrease font size Date:2021-05-14   Views:272

  New Delhi—China's robust demand forecast for soybeans is likely to boost international soybean prices, at least until 2022, market sources told S&P Global Platts May 13.



  The country's soybean imports forecast for 2020-21 marketing year (October-September) has been revised up 2 million mt on April estimate to an all-time high 100.4 million mt, the Chinese Supply and Demand Estimates report said May 12. While 2021-22 demand is projected at an unprecedented 102 million mt, the report said.Since China accounts for over 60% of global soybean trade, any rise in the country's oilseed import is likely to support international beans prices, which have already surpassed 2020 levels by a big margin.



  While US soybean futures prices for nearby shipments have spiked over 90% on the year to a nine-year high of $16.3538/bushel 0730 GMT May 12, Brazilian domestic prices have reached all-time high levels of Real 161/60 kg in April, up 85.5% on the year.



  Although tight beans supply situation in Brazil and the US has also played an important role in the latest price rally, China's hunger for soybeans has primarily kept the prices ticking.



  China imported in 28.63 million mt of soybeans in the first four months of 2021, up 17% from the same period last year, customs data showed, primarily from the US and Brazil, world's top oilseed suppliers.



  So far, in the current marketing year 2020-21 (September–August), US soybean inspection for exports are estimated at 55.7 million mt, compared with 34 million mt last year, the US Department of Agriculture report said May 10, with majority volumes headed for China.



  While, Brazil's soybean exports in 2021 calendar year have reached record levels.



  According to Brazilian foreign trade department, the country has shipped 33 million mt of beans between January and April, up 3.5% year on year. China accounted for 73% of those Brazilian shipments so far in 2021, it said.



  Brazil and the US are the world's biggest soybean suppliers, while China is the top importer.



  Hog herd recovery fueling soybean demandBacked with strong growth rate of live pigs, the demand for soybean-based animal feed is also seen rising in 2021.



  According to China's Ministry of Agriculture and Rural Affairs, the country's swine herd is expected to cross 440 million heads by the end of 2021, compared with 406 million in 2020.



  China's soybean demand suffered a hefty blow between 2018 and 2020 due to the African swine fever epidemic, which is fatal to pigs.



  The ASF first emerged in China in August 2018, which resulted in the loss of over 50% of its swine population. Following large-scale quarantine measures, over 200 million pigs were culled that year, leading to a massive shortage of pork in the country and record pork prices.



  China's pig farming sector has experienced a rapid consolidation since late 2019 as small-scale farms were amalgamated into big entities under a government directive and over $30 billion invested in the consolidation, a China-based consultancy said.



  According to Platts Analytics, due to China's strong hog herd recovery from ASF, the country is forecast to import 100 million mt and 102 million mt in 2020-21 and 2021-22 marketing years, respectively.


 
 
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