China Soy Crush Recovering Slowly

CONAB Releases Latest Update for Brazil

• The agency forecast the soybean crop at 135 million tonnes, up from 134 million in February and above last year’s 125 million.
• USDA forecast the crop at 134 million tonnes in March.
• Brazil’s first corn crop is seen at 23.5 million tonnes with the second crop forecast at 83 million tonnes.
• That makes for a total corn crop at 106.5 million tonnes, which is below USDA’s latest forecast at 109 million but would be above last year’s crop at 102 million tonnes.
• The Brazilian government announced yesterday that it would halt the corn import tariff exemption on March 31, as originally announced.
• The government also stated that it plans to offer incentives to producers for its upcoming summer corn planting season with details about incentives expected to be floated in May.
• That could impact summer plantings, which would start late in the 2021 calendar year.

FBN’s Take On What It Means: The record soybean crop comes as no surprise; it is just a question now of marginal changes to the total. But, the world needs the soybeans with the main risk being if ASF issues are not contained in China. For corn, the market may not be as ready to believe the large total, given the late planting season, but acres likely will be up given larger soybean acreage and the current price incentives for producers. Regardless, the late planting could keep the top end of the forecast totals hard to reach. At the end of the day, the updates from CONAB do not alter our current views on the market.

China Soy Crush Recovering Slowly

• Chinese weekly crush for February 27 - March 5 increased from the previous week, but isn’t rebounding as quickly to pre-holiday levels.
• The weekly crush was just under 1.7 million tonnes, up from 1.5 million the week before, but below 1.9 million last year.
• Capacity utilization at processing plants increased to 47.4% from 43% previously.
• Cumulative 2020/21 crush is at 40.1 million tonnes, 12.3% higher than last year at 35.7 million.
• Bean stocks in China’s ports decreased to 4.8 million tonnes from 5 million, compared to 3.8 million last year.
• Meal stocks increased on the week to 851,000 tonnes from 748,000 previously.
• May soymeal futures on the China's Dalian Commodity Exchange fell 4.1% to 3,199 yuan ($492.32) per tonne in Thursday’s trade.

FBN’s Take On What It Means: Slow unloading operations due to ongoing Covid concerns and reduced supplies coming in from Brazil due to slow harvest could keep bean stocks low. China’s domestic meal demand tends to be reduced for two or three weeks after the Lunar New Year holiday, but concern is growing that recent African Swine Fever outbreaks are causing a bigger impact on domestic meal demand.

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