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July 23, 2020 | FBN Insights | Kevin McNew

China Needs U.S. Soybeans

China has increased purchases of U.S. soybeans over past week to cover needs for this fall

China Needs U.S. Soybeans 

  • China has increased purchases of U.S. soybeans over the past week to cover needs for this fall.
  • It’s reported China still has to buy 20% of their needs for September, 40% for October, and November/December purchases are minimal.
  • June's monthly crush for China is projected at a record high for any month at 9.1 million tonnes compared to 8.7 million last month and 6.7 million last year.
  • Cumulative 2019/20 soy crushing is 69.8 million tonnes, up 2.3 million tonnes from last year.
  • China needs to purchase approximately 18–20 million tonnes of beans through the end of the year before Brazilian harvest begins in earnest.

FBN’s Take On What It Means: Bean stocks in China are expected to keep increasing through July and August until big arrivals from Brazil tail off. US prices are the most competitive in the world, but importers likely have minimal purchases for the fall as they were waiting to see how US crops developed. Competition for limited export capacity could be heating up in the next several weeks. 

Black Sea Winter Wheat Harvest Lagging

  • Russia’s winter wheat harvest was reported 54% complete on 8.4 million hectares.  
  • The average yield at 3.49 tonnes per hectare compares to yields at the same time last year at 3.79 tonnes per hectare.
  • USDA’s forecast for Russia’s winter wheat crop is at 56 million tonnes compared to 52.5 million last year. 
  • Ukraine harvest is 36% complete on 2.4 million hectares. 
  • Yields are 3.46 tonnes per hectare, below the 3.49 tonnes per hectare at the same stage last year. 
  • Production is on pace to total 23 million tonnes compared to the latest USDA forecast at 26.5 million.

FBN’s Take On What It Means: Wheat production forecasts for the Black Sea region have been decreasing due to the hot and dry weather this spring. Harvest results to date appear to be validating these outlooks. If there is not significant improvement in yields as harvest progresses, USDA will likely need to further adjust projections, and origins outside the region have opportunity for increased exports. 

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