Mar 01, 2021

Ag Markets Mostly Higher Looking for Increased Demand

China soybean futures record high, soy crush to decrease

China Soybean Futures Record High

  • Soybean futures hit a record high overnight, on tight supply and expectations for fewer soy acres in favor of corn which has higher profit potential.
  • China plans to increase its area planted to corn by at least 667,000 hectares (1.65 million acres) in 2021.
  • Some consumers are willing to pay a premium to non-GMO soybean oil and that helps support domestic soybean futures.
  • China does not permit planting of GMO soybeans and its domestic soybeans are mainly used in the food sector.
  • Soy processors import genetically modified soybeans to crush into soymeal to feed the livestock sector.
  • The rally follows a plunge in soymeal futures late last week as concerns about new spread of African Swine Fever infecting the hog herd increase.

FBN’s Take On What It Means For The Farmer: It is very difficult for China to increase its total planted area; increases for one crop can be expected to lead to reductions in other areas. A cut in China’s soybean planted area has positive implications for exporters who grow non-GMO soybeans and could be a marginal benefit to exporters growing GMO beans. Harvest delays in Brazil from late planting earlier and recent wet weather have kept the US export window open longer than usual, and the market has been looking for indications of any additional Chinese demand. However, if the resurgence of ASF in China is more severe than initially expected, it could curtail increased imports.

FBN
FBN

China Soy Crush to Decrease

  • Soy processors are expected to sharply reduce crush in the coming months due to harvest delays in Brazil pushing up prices.
  • Inventory shortages will be widely felt and probably last till at least mid-April as some crushers have already made plans to suspend operations for a month.
  • Many feed and livestock producers experienced severe shortages last year and have built up ample soymeal stocks in advance.
  • 5.5 million tonnes of soybeans are expected to arrive in China in March, up from 4.28 million tonnes for March last year.
  • China's total weekly soybean meal stocks were at 758,800 tonnes as of February 23, more than twice last year’s level.

FBN’s Take On What It Means For The Farmer: China’s meal stocks should continue to increase temporarily following the recent New Years holiday week as end users work through meal inventories. ASF could also impact Chinese bean imports, but could support US/global crush rates from stronger domestic meal demand and healthy livestock margins if Chinese meat imports increase again.

FBN Market Advisory services are offered by FBN BR LLC, dba FBN Brokerage, FBN BR and FBN Market Advisory (NFA ID: 0508695)

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Kevin McNew

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Magazine

Marketwatch: Jan, 18

US Corn Price Idx: ZCPAUS.CM

open: 5.7667
high: 5.8486
low: 5.7266
close: 5.8288

US Soybean Price Idx: ZSPAUS.CM

open: 13.366
high: 13.376
low: 13.2328
close: 13.2696

US Hard Red Winter Wheat Price Idx: KEPAUS.CM

open: 7.3061
high: 7.3384
low: 7.2334
close: 7.2454

US Soft Red Winter Wheat Price Idx: ZWPAUS.CM

open: 7.0114
high: 7.0566
low: 6.9566
close: 7.0014