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China Attaché Sees Lower Soy Demand

Decrease in imports was due to massive imports of Brazilian soybeans late in 2019/20 marketing year

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China Attaché Sees Lower Soy Demand

  • The USDA ag attachĂ© in China lowered the forecast of China’s 2020/21 soybean imports to 95 million tonnes from 98.5 million last year.
  • The USDA’s last official forecast was for imports of 100 million tonnes, and will be updated in its WASDE report next week.
  • China’s soy crush in 2020/21 was projected to increase to 95 million tonnes from 90 million last year, below the 99 million USDA projection.
  • China’s old crop soybean ending stocks are forecast up sharply to 27.4 million tonnes compared to 25.7 million from the USDA.
  • The attachĂ© projects 2020/21 soy meal feed usage up to 73 million tonnes from 69 million last year, but is below USDA’s 76.2 million.
  • China’s soybean usage was forecast at 17.2 million tonnes vs 16.4 million last year, compared to 18.7 million from the USDA.

FBN’s Take On What It Means: The decrease in imports was due to the massive imports of Brazilian soybeans late in the 2019/20 marketing year. The attaché is less optimistic about the rebound in hog production than previously expected. China’s buying of US beans has slowed from its record pace in the last two weeks. However, with Brazil’s supplies depleted, China will need to continue filling needs here until the next crop is available in the Southern Hemisphere.

Trade Expectations for November USDA Report

  • On average, the trade sees global ending stocks coming in lower for wheat, corn, and soybeans versus USDA’s October report.
  • That likely is primarily tied to production cuts in major exporters stocks.
  • The trade sees USDA cutting the US corn yield from 178.4 bushels in October to 177.7 bushels
  • The soybean yield is also seen lower versus October at 51.6 bushels versus the 51.9 bushels issued last month.
  • With smaller US crops expected, the trade sees a month-over-month decline in ending stocks forecasts for corn and soybean.
  • Smaller stocks expectations for both may also be tied to the trade anticipating exports could be raised, especially for corn.
  • Market views generally align with FBN’s opinions though we have smaller wheat stocks versus the trade and versus USDA’s October forecast.

FBN’s Take On What It Means: USDA’s monthly reports will be a focal point, particularly regarding US export forecasts and production totals for the US, EU, Ukraine, and other exporters with harvest season wrapping up across the Northern Hemisphere. Overall, with stocks moving lower across the board, we view this crop year as an opportunity for producers with additional upside likely in corn and soybean futures.

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