US soybean export sales to China are running unusually high as soybean production prospects in South America deteriorate.
The US has booked 1.7 million tonnes of new crop soybeans to China so far in 2022, close to last year’s record pace. China’s purchases are also occurring unusually early, for delivery in the 2022/23 season, amid concerns about global soybean supplies. China’s increased reliance on the US comes as soybean crops in Brazil and Argentina endure a second consecutive year of drought that is dragging down yields.
With worldwide soybean stocks at their tightest level in years, Chinese domestic prices for soybean meal, used in animal feed, and soybean futures recently reached new highs. China’s soybean imports, which rose to a record 100 million tonnes in 2021, are expected to decline this year because of price pressures, but should mostly continue on an upward trend as Beijing pushes to increase domestic meat production by 15% in 2025 compared with 2020 levels.
China’s hog population has recovered from the 2018 African swine fever epidemic, and the herd will need large quantities of feed grains as the hogs mature and the industry becomes more industrialized. Gro’s China Pork Demand Forecast Model indicates that pork consumption will decline slightly this year but rebound in 2023. Meanwhile, demand for other meats, especially poultry and beef, is expected to climb.
Brazil has become the world’s largest producer and exporter of soybeans in the past four years, with much of that going to satisfy China’s growing demand. This year, however, drought brought on by La Niña has slashed yields and production forecasts in Brazil’s southern states of Paraná and Rio Grande do Sul, which together account for about a third of Brazil’s soybean crop. Gro’s Brazil Soybean Yield Forecast Model indicates a sizable production decline for 2021/22.
Argentina’s soybean crop also is looking weak. Gro’s Argentina Soybean Yield Forecast Model currently indicates a sharp decline in yields and production from last year, pushing ending stocks in Argentina to the lowest level since 2011/12. Argentina is the world’s largest exporter of soybean meal, mostly to Asia and Europe. As Argentina’s crop struggles, interest in US soybean meal exports has picked up, recent export sales reports show.
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