China's Oct soybean imports jump 41% on year on swine fever recovery

New Delhi — China's soybean imports in October surged 41% on the year as the country's recovery from African swine fever supported demand for the animal feed.

According to the China's customs report released Nov. 7, the world's top soybean consumer imported 8.69 million mt of beans in October.

Soybeans futures prices are expected to continue on an upward trend on strong demand from China in the coming days, analysts said.

CBOT November soybean futures prices were trading in the range of $10.98/bu – $11.09/bu on Nov. 6, near a four-year high.

Swine fever

China lost over 50% of its swine population to the African swine fever, which started in August 2018. Following large scale quarantine measures and the culling of more than 200 million pigs, the country's pig population has been on the path of recovery since late 2019.

According to the latest Agricultural Ministry of China's report, the country's pig herd increased by 31.3% year on year, while the sow herd had risen 37% on the year in August.

Boosted by a rising pig herd, China's soybean imports in the 2020-21 (October-September) marketing year is forecast to touch an all-time high of 100 million mt, the US Department of Agriculture said in its latest supply and demand report Oct. 9.

The 2020-21 forecasts for soybean crush and soybean meal feed use are both higher than the USDA's Foreign Agricultural Services China estimate for 2019-20 based on a growing sow inventory and the increasing share of large-scale operations inthe swine sector, the USDA attaché said on Nov. 3.

According to a Chinese government survey, the sow inventory has reached 80% of its pre-African Swine Fever levels.

The soy crush for 2020-21 in China is forecast at 95 million mt compared with 90 million mt the previous year, while soybean meal feed use is projected to reach 73 million mt this marketing year, a 4 million mt increase over the FAS China estimate for 2019-20, the USDA said.

While China purchased the bulk of its soybean shipments from Brazil in earlier months, its focus was set to shift to US soybeans in October as Brazil's supply is limited.

Backed by a weak real currency, which made Brazilian soybeans competitively priced in the first half of 2020, China imported 57 million mt of Brazilian soybeans between January and September, up 23% year on year, Brazilian trade data showed.

Brazil has already sold over 99% of its old soybean stock and is only left with a small volume for domestic demand, a China-based crusher said. "So, our attention has now shifted to the US beans," he said.

The US soybean harvest has been progressing at a swift pace, which signals ample supply to the Chinese crushers in the coming months.

A healthy US soybean harvest coupled with Brazilian planting delays mean a significant boost for US soybean sales between September and February 2021, analysts said.

For the 2020-21 marketing year, US soybean export inspection volumes, as of the week ending Oct. 29, were seen at 16.6 million mt, compared with 9.5 million mt a year earlier, with the majority of the shipments destined for China.