Wednesday, May 20, 2020

"China could face soybean supply issues in Q4 on US-China tensions: sources"

From S&P Global Platts, May 18:
Highlights
Trump threatens to scuttle Phase 1 deal on COVID-19 spread
Brazilian soybeans stock expected to ebb by October
New Delhi — China -- the world's largest soybeans importer and crusher -- could face beans supply issues in the fourth quarter of 2020 due to the US-China tension over COVID-19 and dwindling Brazilian soy stocks, market analysts told S&P Global Platts.

The Asian nation processes over 80% of imported beans into animal feed to fulfill its burgeoning domestic meat production and consumption needs.

China is forecast to import 96 million mt of soybeans and crush in the domestic market 93 million mt, up 4% and 7.5% year on year respectively, in marketing year 2020-21 (October – September), as its livestock sector works to rebuild hog and sow herds decimated by the African swine fever epidemic in 2019, according to the US Department of Agriculture's May supply and demand report.

The Chinese crushing industry is heavily dependent on Brazilian and US soybean imports to meet its crushing needs as its domestic soy output barely fulfills 20% of crush demand, a Chinese trader said. Both Brazil and the US account for over 80% of soybeans supply to the world.
On average, China buys 60% of beans from Brazil and 30% from the US annually, customs report said.

In the first half of a calendar year, Chinese crushers buy more Brazilian soybean shipments, coinciding with the South American country's harvest. In the latter half, while Brazilian soy stocks start to dwindle, China starts buying more US beans.
US-CHINA TENSION Two of the world's biggest economies have been in loggerheads over origin and mismanagement of the coronavirus pandemic. While Trump administration has blamed China for the pandemic deaths and threatened punitive actions, the Chinese government has responded with counter-allegations of conspiracy and rhetoric. ....
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