China's 2019-20 soybean crushing forecast at 93 million mt on African swine flu recovery

New Delhi — China's soybean crushing volume for marketing year 2019-20 (October - September) is forecast to rise 7.24% year on year to 93 million mt, a 4% increase from April's estimate , the Chinese agriculture outlook committee said Tuesday.

With higher expected 2019-20 crushing volume, China could purchase more raw soybeans than previously expected.

According to the US Department of Agriculture's April supply and demand report, China is forecast to import 89 million mt of soybeans in 2019-20, up 5% year on year.

With higher crushing forecast, China could be buying over 92 million mt of soybeans in 2019-20, market participants said.

The world's largest soybean importer and crusher processes over 80% of imported beans into soymeal-based animal feed.

ASF RECOVERY

China may actually be a bright spot for soybean purchases in 2019-20 as its livestock sector works to rebuild hog and sow herds decimated by the African swine fever epidemic in 2019, the USDA said in its April report.

China is slated to recover from the African swine fever epidemic in 2020, the USDA said. A gradual recovery in the pork and crushing sectors will also push up soybean imports in 2020, the agency added.

China is the world's top pork producer and consumer.

ASF wiped out almost half of China's pig population since its outbreak in August 2018, with over 200 million culled, market sources said.

No large-scale culling of pigs is expected to happen in China at present, and pig farming is recovering, with large pig farming companies expanding their herd, Rosa Wang of agro consultancy JCI China said.

Soybean meal demand will increase in 2020 due to China's shift toward more large-scale pig operations, with increased use of commercial feed as opposed to swill, according to the USDA. Soybean meal feed use is forecast to increase to 65.1 million mt in 2020-21 from an estimated 63.4 million mt in 2019-20.

According to the agriculture ministry, China's overall sow inventory increased by 1.2% in January from December 2019, while large-scale pig farms saw a higher rate of sow inventory growth at 2.2% month on month.

Chinese agricultural officials were positive that 80% of its pig production would recover in 2020, JCI added.

There will certainly be blips of coronavirus recurrences and a possible flare up of ASFr once again, but for the most part, the worst is over for China, said Pete Meyer, head of grain and oilseed analytics, S&P Global Platts, adding: "We believe China can import up to 90 million mt by the end of current marketing year in September, up 9% year on year."