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China's soybean imports to grow in 2020-21 - but virus to weigh on vegoil trade

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China’s soybean imports will extend their recovery next season as the country’s hog producers rebuild herds following the African swine fever epidemic – but coronavirus will overshadow vegetable oil purchases.

 

The US Department of Agriculture’s Beijing bureau, in its first forecasts for 2020-21, on an October-to-September basis, pegged Chinese soybean imports at 86.0m tonnes - a rise of 2.0m tonnes year on year on its estimates.

 

The forecast for a continued revival, from a low of 82.54m tonnes reached in 2018-19, reflected expectations of “partial progress towards rebuilding the swine herd following the 2018 African swine fever outbreak” which prompted a huge cut in pig numbers.

 

Exports touched a record 94.10m in 2017-18 ahead of the swine fever outbreak, with the trade war with the US an extra depressant to trade.

 

The bureau gave no forecasts for the make-up of soybean import origins in 2020-21 although did note that “China continues to diversify its basket of soybean suppliers”.

 

Herd revival

China’s actual soybean crush - to produce soymeal for animal feed, as well as soyoil - was “forecast to reach 85m tonnes in 2020-21 after falling to an estimated 82.5m tonnes in 2019-20,” a four-year low.

 

The bureau highlighted Chinese farm ministry data showing that the country’s sow inventory rose by 1.2% month on month in January, with the growth rate at large-scale producers running at 2.2%.

 

Furthermore, ministry data “show a growing trend in swine feed production over the four-month period from September to December, with sow feed production up 10% in December compared to the previous month”.

 

‘Going through the roof’

Other commentators have pointed to buoyant imports of whey, a key piglet food ingredient, as evidence of herd rebuilding, with Rabobank earlier this week raising international price forecasts for the protein, while cutting forecast for other dairy commodities.

 

One sector expert this week reported to Agrimoney too that “not only is whey powder demand rising, also piglet prices are going through the roof.

 

“Rising piglet prices are a typical sign of the start of a new cycle, which is obviously under way,” led by large-scale operators, the source said.

 

Covid curb

By contrast, Chinese consumption of vegetable oils, used nearly all in the food industry, will rise by a more modest 1.1% to 37.77m tonnes, weighed by the fallout from coronavirus, the USDA bureau said.

 

“Vegetable oil use will grow more slowly in 2020-21 than in recent years due to reduced demand from the restaurant, hotel, and catering sectors attributed to the Covid-19 outbreak.

 

“The outbreak of the disease in early 2020 ushered in a period of restaurant closures and government-imposed restrictions on large gatherings, public transportation, and movement within and between provinces, dampening demand in the restaurant and tourism sectors.”

 

And with the increased soybean crush meaning increased domestic production of soyoil, China’s imports of vegetable oils will fall next season, by 365,000 tonnes to 11.50m tonnes.

 

Palm oil will continue to take the lion’s share of import demand, at 7.10m tonnes, down 100,000 tonnes year on year, “based on the price advantage… versus other imported oils”.

 

Palm oil imports at 7.10m tonnes would still represent an elevated level by historical standards, and likely to keep China challenging the European Union for second place among world importers, with India historically the top buyer.

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