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USDA slashes China soybean import forecast 9.5%

The USDA attache in Beijing has slashed its estimate of Chinese imports of soybeans this year 9.5% to 85 million mt – bringing it more in line with Chinese estimates and front-running the Washington DC office's new projection to be published on Thursday.

The attache said that Chinese efforts to slash soybean use for feed due to trade tensions, as well as an outbreak of African Swine Fever, would mean that China would import 9 million mt fewer soybeans this year than previously thought.

“The trade situation has ignited efforts by China to reduce US soybean imports and slash soybean feed use, through reductions in the feed protein ratio and the use of substitute protein meals,” the Beijing attache said in a report released this weekend.

“In addition to the trade situation, an African Swine Fever outbreak in China that began in August continues to spread through the country. While the disease is not expected to impact pork production in the short term, it is likely to lead to reduced herds over the longer term,” it said.

As a result, the soybean crush is expected to fall from 93.5 million mt to 85 million mt, bringing down overall domestic consumption by 9.2 million mt to 101.4 million mt.

Soymeal demand for feed use is set to fall 2.6 million mt to 66.6 million mt this year, with rapemeal, sunmeal and fishmeal recording increases.

“Taken together, the reduction in soymeal feed use and slight increases in other protein meals feed use will result in an overall soymeal-equivalent use for feed of 85.9 million mt in 2018/19, a decrease of 1.7 million mt compared to the previous year."

Chime

The new export estimate chimes with China’s own estimate of 84 million mt of soybean imports in the 12 months starting in October.

It also comes just a few days after the CEO of agribusiness giant Bunge said he expected China could “wiggle through” to Brazil’s new harvest of soybeans without buying US supply.

Given the reason for the reduction in the projection, should the new estimate feed through to the WASDE report on Thursday, it will likely see an increase in US ending stocks from the previous projection of 885 million bushels.

China’s government in July slapped a 25% import tax on US soybeans as part of a trade war between the two nations.

China, the world’s biggest producer of pork, relies heavily on US farmers for protein for animal feed and analysts had previously estimated that it would be forced to buy US beans when Brazil’s annual supply runs out in the fourth quarter of the year.

But, despite US beans being cheaper to crush than Brazil beans, even after the punitive tax, no new deals have been contracted.

The USDA said that a factor was that there was “widespread concern among importers that China will implement administrative actions at port to discourage purchases from the US”. AGRICENSUS


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