NAPERVILLE, Illinois, Nov 17 (Reuters) – China has been sporadic in the U.S. soybean market lately, although its buying last week was surprisingly large and likely much needed as supplies of beans from the main importer have become scarce .
However, China’s pork industry, the world’s largest, could be on tough ground, as evidenced by rising pork prices, suggesting supplies have fallen and pork imports may need to rise again. .
China accounts for 60% of the world’s soybean imports, and upon arrival the seeds are ground into protein-rich pig feed to support the country’s strong appetite for pork.
China is also a top pork importer, which may offset the need for soybeans if increased pork imports result from lighter pork production. When soybean imports are strong, it often indicates healthy food demand and a sufficiently large pig herd.
Chinese soybean meal prices hit record highs in October as supplies tightened after months of lighter soybean imports, and prices remain near those levels. Last month’s bean arrivals unexpectedly fell to their lowest level in eight years due to US logistical problems the previous month, although US exports have since increased significantly.
China dramatically increased its pork imports in 2019 after the disease spread through its pig herd from 2018, potentially killing up to 40% of the country’s pigs. Soybean imports were less vigorous during this period, which coincided with the trade war, when China shunned American products.
In mid-2020, China’s pork imports were four times higher than previous averages of around 100,000 tonnes per month, remaining high for most of 2021. June 2022 volume of 120,000 tonnes was the lowest in over three years.
China reported that its sow herd in September was down just 4% on the year, although prices for live hogs last month hit the highest levels since the start of 2021. Analysts there -bots say such high prices would be unlikely without the pig population issues. China maintains sufficient breeding capacity.
China has yet to increase its pork purchases from the United States, one of its main suppliers. Sales have been modest but steady since the start of 2021, the last time China made bigger trips. Through Nov. 10, U.S. pork sales to China for 2022 were at a four-year low and nearly half the level of a year ago.
Chinese pork imports have risen slightly since the mid-year slump due to a notable increase in shipments from Brazil since the start of this year. U.S. shipments to China in August also hit the highest levels in more than a year, but the difference is smaller.
Through October, China’s 2022 soybean imports of 73.2 million tonnes were down 7.5% year-on-year. Its U.S. purchases for shipment through August 2023 were close to 21 million tonnes as of Nov. 10, up 12% from the same period last year, when lighter Chinese purchases were for U.S. exporters.
The wild card continues to be China’s economic health, including its demand for agricultural products, as the country has taken a very restrictive approach in the post-pandemic era. Beijing has only recently relaxed its COVID-19 policy, although cases are currently on the rise, and it is uncertain whether the government will remain comfortable with a looser grip.
Karen Braun is a market analyst for Reuters. The opinions expressed above are his own.
Writing by Karen Braun Editing by Matthew Lewis
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