US officials dampened hopes for Chinese soybean imports, even as official data showed them easing back in August, as the surge in supplies from Brazil begins to dry up.
The US Department of Agriculture’s Beijing bureau raised by 5.0m tonnes to 95.0m tonnes its forecast for China’s soybean imports in 2019-20, taking it above the current record of 94.1m tonnes, set two years before.
However, the figure – based on an October-to-September crop year – remained 3.0m tonnes below the USDA’s official forecast.
And for 2020-21, the bureau, while upgrading its forecast by 4.0m tonnes, saw Chinese imports remaining flat year on year.
The USDA sees them expanding to 99.0m tonnes.
‘Gradually drying up’
The report was released shortly ahead of official Chinese data showing that the country’s soybean imports fell month on month in August, by 490,000 tonnes to 9.60m tonnes, in a decline attributed to waning stocks of supplies available in top origin Brazil.
“The supply of soybeans from Brazil’s crop is gradually drying up,” said Commerzbank, noting that “very large quantities were imported in the previous months”, when the South American country’s supplies were renewed by its harvest, early in the calendar year.
China’s soybean imports have now reached 88.7m tonnes for the October-to-August period, the first 11 months of 2019-20, meaning that only 6.3m tonnes are required for September to meet the bureau’s forecast.
To meet the USDA’s figure would need September imports of 9.3m tonnes.
‘Concerns about reliable access’
The bureau’s estimates were based on lower forecasts than the USDA for the soybean crush, into soymeal used in livestock feed and soyoil, used largely in cooking oil, as well as making biodiesel.
While acknowledging that Chinese farm ministry data show the country’s feed production in July soaring 16% year on year to a three-year high, the bureau said the statistics “also indicate that feed production fluctuated during the first seven months of 2020”.
The bureau also noted a trend among crushers to have forward-loaded soybeans to earlier in 2020, for fear of logistical disruptions stemming from the Covid-19 pandemic, which has hit Brazil, the biggest soybean exporter, particularly hard.
Nonetheless, it flagged too worries over China-US relations as continuing to encourage stockpiling, with the turn in the cycle to late in the calendar year when the US, with its supplies renewed by harvest, becomes temporarily the top soybean origin.
“With the transition from the Brazilian to the US harvest/shipping season, Chinese concerns about reliable access to US soybeans due to the bilateral relationship are likely to sustain continuing imports, as importers seek to stock up ahead of what they perceive as a potential supply bottleneck.”
The bureau was also relatively downbeat on Chinese palm oil imports in 2020-21, seeing them at 6.40m tonnes - 200,000 tonnes below the USDA’s official forecast.
However, this is after a 2019-20 campaign which the bureau saw reaching 6.35m tonnes, ahead of the USDA’s figure of 6.20m tonnes.
“Increased soybean imports and soymeal demand in 2019-20 and 2020-21 are expected to push up the soybean crush volume, thereby adding to the supply of domestically produced vegetable oil,” the bureau said.
“This will limit opportunities for additional vegetable oil imports. In addition, reduced demand by China’s catering industry will cut palm oil consumption in 2020.”