Brazil May Import More Beans
- Abiove forecasts 2020 soybean imports will reach 1 million tonnes.
- Imports of 800,000 tonnes are projected in 2021, up from 500,000 tonnes projected in November.
- Brazil often oversells its own production and then needs to import supplies later in the season.
- The country imports mostly from Paraguay, but did unload one cargo from the US this season.
- The soy crushing association forecasts next year’s soy production at 132.6 million tonnes, in line with the USDA’s 133 million.
- Soybean exports are projected to grow to 83.5 million tonnes from 82.3 million this year.
- Next year’s ending stocks are projected to be up from 219,000 tonnes to 419,000 tonnes.
FBN’s Take On What It Means For The Farmer: Brazil will likely continue to be an aggressive exporter of soybeans next year, looking to fulfill growing demand from China. This will again leave the country needing to import greater than average supplies of beans next year to meet domestic demand. If forecasts of record production are realized, this should limit significant further price increases. However, the growing season has not been ideal which may lead to future cuts to that outlook.
China Hog Herd Recovering
- China reported its hog herd is back to 90% of its pre swine fever numbers.
- Production is expected to be at 100% in the first half of 2021.
- Hog production in China was down 40% by mid 2019 after African Swine Fever started spreading rapidly in 2018.
- China’s government has subsidized the comeback, helping to build large multi-level operations.
- Pork demand remains large and has driven up prices, especially as the Lunar New Year holiday approaches.
FBN’s Take On What It Means For The Farmer: The rapid recovery of China’s hog herd has been faster than most expectations, and has fueled a large increase in feed demand. Though numbers have increased, hog and pork prices are still much higher than usual, and further production increases will be needed to meet the growing demand. We would expect higher levels of Chinese buying to continue into the new year and remain supportive of US exports.
FBN’s Chart of the Day: Digging into South America Soybean Stocks
FBN’s Take On What It Means For The Farmer: Soybean stocks in Brazil plus Argentina are forecast to remain tight relative to use for the 2020 crop year despite USDA’s current projection of a record soybean crop at 183 MMT. That would be up from last year’s crop at 175 MMT but the exporters are heading into this harvest season with limited supplies. This keeps the production balance fragile with additional cuts to South America’s bean crop detrimental to the global soybean balance sheet.
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