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September 10, 2019 | FBN Insights |

Chinese Soybean Imports Surge During August

Imports hit the highest level in close to 18 months

Chinese Soybean Imports Surge During August  

China's soybean imports during August jumped 9.7% from July to hit the highest level in close to 18 months.  

At 9.48 million tonnes, the Chinese soybean imports were up from 8.64 million tonnes in July, and above the 9.15 million tonnes imported in August 2018.  

Facing reduced demand from the hog sector, China bought 56.31 million tonnes of soybeans in the first eight months of the year, down 9.2% YOY.  

Some cargoes from the United States did not get loaded or delivered in July and cleared customs in August.

Beijing slapped 25% tariffs on U.S. soybeans. 

FBN’s Take On What It Means: A mixed report for the U.S. farmer. China was an active buyer of U.S. soybeans back in July prior to heightened trade tensions and procurement restrictions. With Brazilian export, FOB, prices moving higher as supplies have been pulled forward, the U.S. soy export program could become the supplier of choice over the next few months.                     

 

      

China Certifies 25 More Brazilian Packers For Exports

On Monday, Sep. 9, China granted export licenses to 25 Brazilian meatpacking plants. This move follows the certification of 31 Brazilian packing plants in March.  

The plants that are certified for immediate export business include: 17 beef, 6 chicken, one pork and one donkey meat facility.

China is Brazil's largest export market for beef, chicken and pork.  Export demand has been surging since an outbreak of African swine fever (ASF) has decimated China's hog herd.  Some estimates show Chinese hog inventories contracting by 200 million head. 

Brazil's agriculture ministry suggested the country is streamlining the administrative process to make the evaluation process for more plants easier.

China has been diversifying its global protein supply chain as ASF has forced the country to aggressively look beyond its border to procure animal protein.  

Despite the enhanced Chinese demand for animal protein imports business  with the U.S. has been minimal. Currently the U.S. exports “encouraging” volumes of beef to China and since an outbreak of Avian flu in 2015 China has not imported any poultry.  Despite a 25% import tariff and years of non-science based trade tensions recent U.S. pork volumes have been encouraging.    

FBN’s Take On What It Means: At FBN we are not surprised by the latest round of Chinese certifications.  This move can represent a negative to the U.S. beef, pork and poultry packers as the Chinese continue to diversify their global protein supply chain and the U.S. does not appear to be a targeted trade partner.  Brazilian packers have spent years developing reliable and biosecure animal protein export industries and this latest round of certifications proves that those efforts have been successful.                

The risk of trading futures, hedging, and speculating can be substantial. FBN BR LLC (NFA ID: 0508695)

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