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EU DATA: Soybean meal imports in 2019-20 rise 2% on year, soybean imports up 1%

Highlights

Brazilian soybean meal accounts for 46.3% of EU imports

Netherlands remains top raw beans buyer

Easing lockdown measures boost soybean demand

New Delhi — The EU's soybean meal imports rose 2% year on year to 16.87 million mt in the period spanning July 1, 2019, through June 7, 2020, while raw soybean purchases were up 1% at 14.17 million mt, according to European Commission data.

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The EU is the world's largest soybean meal importer and second-largest raw beans buyer.

Since the start of the 2019-20 marketing year on July 1, 2019, Brazilian soybean meal accounted for 46.3% of the EU's imports at 7.81 million mt, while Argentina -- the world's top soybean meal supplier -- held a 41.2% share at 6.95 million mt.

Market participants expect Argentina's share of EU soybean meal imports to fall further in the coming weeks, as its crushing industry has grappled with supply-side constraints in recent weeks due to lower raw beans production, high export tariffs of 33% on soy products and reduced draft levels on the Parana River severely impacting transportation of commodities.

Soybean output in Argentina, the world's third-largest soy producer and exporter, is forecast to total 49.5 million mt in the 2019-20 crop year running through October 31, down 10% year on year due to an extended drought that took hold in January, according to a mid-May report by the Buenos Aires Grain Exchange.

With global demand for meat rising, particularly from China, the rise in imports of soybean meal, which is used mainly as an animal feed, is set to continue in the EU, the world's largest meat exporter, sources said.

The African swine fever outbreak in China, which is the world's largest pork consumer, led to the culling of millions of pigs there starting in August 2018. As a result, China has been importing more pork and other types of meat from various sources, including the EU.

RAW SOYBEAN IMPORTS

The EU's purchases of raw soybeans were rising steadily through June 7 on demand recovery due to easing lockdown measures related to the coronavirus pandemic.

Europe's imports of soybeans under-performed an expected increase until May due to disrupted trade flows, Terry Reilly, senior commodity analyst at brokerage Futures International, said. Severely curtailed demand for transportation fuels due to the coronavirus pandemic has put pressure on the global biofuel industry, reducing the amount of oilseed needed to make biodiesel.

The situation is changing now as demand for soybean oil could increase as crude oil prices rise, sources said. Soybean oil is used as an ingredient in biodiesel.

The Netherlands remained the EU's top buyer of raw beans, followed by Spain, Denmark, Portugal and Italy.

Total EU soybean imports in 2018-19 stood at 15 million mt, with the US and Brazil the top two suppliers.

Brazil's market share of EU imports grew 1 percentage point year on year to 41.7% or 5.90 million mt in the period through June 7, while the US's share fell 1 percentage point to 37.0%, or 5.25 million mt.

South American beans were selling at an average discount of 10 cents/bu to US-origin beans until May on a weaker Brazilian real, sources said. The Brazilian real lost over a third of its value against the dollar since January, which has made Brazilian agricultural commodities attractive for Chinese and EU buyers.

However, with the dollar weakening again on easing of lockdowns measures in major global economies, US soybeans have become more price-competitive in June.

Brazilian soybean sales typically peak along with the harvest between February and May, while September through December is the period when the US soybean harvest gets ready for domestic sales and exports.

The other major soybean suppliers to the EU were Canada, Ukraine and Paraguay.

With easing of lockdown, EU imports of soybeans and its derivatives could continue to rise as logistical bottlenecks and delays at ports continue to dissipate, market sources said.