Financial Times writers Colby Smith and Stephanie Stacey reported yesterday that, "The dollar hit a three-month low on Tuesday and US Treasury yields slid as investors grew increasingly confident that…
Reuters News reported last week that, “China’s soybean imports from top supplier Brazil fell in July from the previous year, customs data showed on Friday, as poor crush margins weighed on demand.
“China, the world’s top buyer of soybeans, brought in 7.88 million tonnes of the oilseed from Brazil in July, down 3.7% from 8.18 million tonnes a year earlier, according to data from the General Administration of Customs.”
The Reuters article stated that, “Chinese crushers stepped up purchases of soybeans from the South American country in the earlier months of the year to profit from good margins, driven by a fast recovering pig herd.
Demand from the livestock sector has, however, weakened lately as hog margins fell to negative territory on plunging pork prices.
“For July, China’s soybean shipments from all origins totalled 8.67 million tonnes, down 14.1% from the previous year.
“China also imported 42,277 tonnes of soybeans from the United States in July, up from 38,331 tonnes in the same month a year earlier, according to customs data.”
“China’s sow herd, which had been rising for 21 months, fell for the first time in July from the previous month, after a plunge in hog prices pushed many farmers to get rid of unproductive sows,” the Reuters article said.
The USDA’s Economic Research Service (ERS) indicated in its monthly Oil Crops Outlook report last week that, “U.S. soybean exports in 2020/21 are forecast down by 10 million bushels to 2.26 billion while the 2021/22 forecast dropped by 20 million bushels to 2.055 billion bushels. Higher soybean prices and decreased demand for soybeans in China, a major importer of U.S. soybeans, lead to the lower soybean export forecast.”
ERS also pointed out that, “Lower profitability for Chinese hog producers has mitigated soybean meal use, decreasing crush volumes and raising soybean inventories. As a result, old crop crush estimates are forecast down from 96 to 94 million metric tons. Because this trend in crush volumes may persist, 2021/22 crush estimates have been dropped by 2 million to 98 million metric tons. China is expected to rely on domestic soybean stocks to satisfy demand—lowering old and new crop import estimates to 97 and 101 million metric tons, respectively. Not surprisingly, this reduction in Chinese crush is expected to decrease Brazil’s 2020/21 soybean exports by 500,000 metric tons to 82.5 million.”
But still, Bloomberg writer Elizabeth Elkin reported last week that, “China’s voracious appetite for American farm products might be a rare source of comfort for uneasy investors looking at commodity markets battered by resurgent Covid infections and stronger dollar.
“Soybean sales were the highest since January for the week ending in Aug. 12, with China purchasing over 1.1 million tons and total sales at about 2.2 million tons. U.S. wheat exports to China were the most since April at 197,400 tons. China also boosted its cotton purchases to an eight-month high.”
Ms. Elkin noted that, “Grains markets are falling across the board, reacting to a stronger dollar, as well as better weather forecasts and strong yield prospects for corn and soy in several key states.”
With respect U.S. pork exports, ERS stated in this month’s Livestock, Dairy, and Poultry Outlook that, “U.S. pork exports are expected to decline this year and next, largely because of lower shipments to China. Exports this year are expected to be 7.4 billion pounds, down 1.8 percent from a year ago. In 2022, pork exports are forecast at 7.3 billion pounds, almost 1.5 percent lower than anticipated shipments this year.”
The ERS report stated that, “The United States’ recent lower exports to China\Hong Kong follow China’s increasing domestic pork production, and together with lower pork prices reflect the ongoing rebound from African Swine Fever (ASF).”
The Outlook report added that, “Lower forecasts for U.S. pork exports in the second half of 2021 and through 2022 primarily reflect lower shipments to China\Hong Kong as enhanced biosecurity in newly constructed production facilities improves prospects for higher pork production in China.”
In other news regarding African Swine Fever, Reuters News reported last week that, “Bulgarian veterinary authorities on Wednesday reported an outbreak of African swine fever at an industrial farm with 13,000 pigs in the central village of Apriltsi.”
And a separate Reuters article from last week reported that, “The Philippines’ agriculture ministry said on Thursday active cases of African swine fever were declining and confined to less than 1% of the nearly 3,000 villages that recorded outbreaks since the first cases were detected in 2019.
“The fall in infections and an ongoing government-funded hog repopulation programme had put the Southeast Asian country on track to be able to produce a domestic meat surplus starting in 2023, the ministry said.”
The Reuters article noted that, “The Philippines, the world’s seventh-biggest pork importer before local demand was hammered by the pandemic, has been hit hard by such outbreaks and forced to ramp up pork importation to address an acute domestic shortage and temper food inflation.”