Chinese Soy Crush Falls
China’s weekly crush was 1.57 million tonnes, down 5% from the previous week and down 14% from last year.
Over the past five years, crush was well over 2 million tonnes at this time, but negative crush margins have led to slower production.
Continued strong weekly hog slaughter and poor hog margins have restricted domestic meal demand, which decreases the overall need for new supplies.
Large bean imports from South America are causing bean stocks to rise.
Soymeal stocks were 874,000 tonnes, 5% for the week, and well above the 698,000 seen last year.
Total 2020/21 crush is estimated at 64.5 million tonnes, 3.4 mmt higher than last year, but below USDA’s projecting 4.5 million increase.
If the trend continues USDA may lower its crush projection by 1 million tonnes, and could reduce its import projection below 100 million.
FBN’s Take On What It Means: Though hog herds in China are reported to be nearly recovered from the African Swine Fever, prices have fallen by almost 50% this year. This has put many producers in the red and encouraged further liquidation, especially of low-productivity breeding animals. However, once this near term slump is past we would expect continued herd growth to support better demand for feedstocks.
Argentina Crop Update
The Buenos Aires Grain Exchange reported corn harvest at 47.6% complete compared to 42% last week, 78% last year, and 54% average.
Corn crop ratings improved slightly to 39 good/excellent, 41% fair, and 20% poor/very poor.
If current yields are maintained for the balance of harvest, eventual output could be above 50 million tonnes.
The exchange crop forecast is unchanged at 48 million tonnes versus the USDA at 47 million and the Rosario Grain Exchange at 50 million.
The 2020/21 soy harvest has concluded with production estimated at 43.5 million tonnes, down 11% from last year.
The average yield is estimated at 2,670 kilos per hectare, which would be the second lowest in the last five years.
The wheat crop normal/excellent rating is 10.8% higher than the previous year, and the crop forecast is at 19 million tonnes versus 17 million last year.
FBN’s Take On What It Means: The BAGE soy crop projection continues to be among the lowest trade estimates. With the soybean harvest concluded, the corn harvest will accelerate. Argentine corn yields continue to come in higher than expected and it appears likely that production forecasts will increase. This will offset some of the shortfall expected in Brazil, which will need to import some supplies.
FBN Market Advisory services are offered by FBN BR LLC, dba FBN Brokerage, FBN BR and FBN Market Advisory (NFA ID: 0508695)
The risk of trading futures and options can be substantial and may not be suitable for all investors. Past performance is not necessarily indicative of future results.
This is not an offer or solicitation in any jurisdiction where we are not authorized to do business or where such offer or solicitation would be contrary to the local laws and regulations of that jurisdiction, including, but not limited to, persons residing in Australia and Canada.
