New Delhi — China's import demand for soybeans could be reduced by a cumulative 42 million mt by 2019-20, largely as a result of the African swine fever outbreak in the country, according to the US Department of Agriculture.
China's soybean import demand in 2017-18 was 3 million mt below the USDA's initial forecasts decline. That was "related to China's reduction in soybean meal in feed rations prompted by the current trade engagement with the United States," USDA said in a report released Friday.
For 2018-19 the loss is projected to reach 17 million mt, while the 2019-20 loss is estimated at 22 million mt, USDA said.
"African Swine Fever in China will be a game changer for the global oilseed complex, and soybeans in particular, in the coming years," the agency said.
"The pig herd in China has declined by 20% since ASF was first reported in early August 2018, and China's feed demand and soybean imports are projected to fall dramatically from earlier forecasts," the report added.
China is the biggest soybean importer, while the US, Brazil and Argentina are the top exporters.
Last July, China put an additional 25% import tariff on US-origin soybeans in response to tariffs the US placed on Chinese goods. As a result, US soybean exports to China from September to February fell 85% year on year to 4 million mt, as Chinese buyers looked to Argentina and Brazil.
Despite the ongoing US-China tariff war, the Chinese market has an oversupply of beans from Brazil and Argentina, the report added.
The global soybean market is oversupplied. Even if China does not import US-origin soybean, supply from South America is sufficient for China, which is reeling from the impact of an outbreak of African swine fever, Xu Jianfei, director of consulting and brokerage firm OCI-China, told S&P Global Platts.
In March, Brazil's share of China's soybean market rose to 57%, an increase of 16 percentage points year on year, while the US's share declined from 55% to 31%, Chinese customs data showed.
There is an oversupply and low demand of soybean and due to ASF outbreak, Chinese hog population may not recover at least till early next year, said Terry Reilly, senior commodity analyst with Futures International.
"In addition, if the ASF virus continues to spread across Asia, soybean imports by other countries may also decline," Reilly said.
Large global soybeans supplies and lower demand in China due to ASF will continue to pressure soybean prices globally, USDA said.
-- Asim Anand, email@example.com
-- Edited by Alisdair Bowles, firstname.lastname@example.org