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China’s soybean imports to slow in 2021 due to collapse in pig profitability

Screen Shot 2021-07-26 at 1.37.13 PM

Source:  The Pig Site , 26 July 2021, photo credit: Organic Facts

China’s soybean imports are expected to slow sharply in late 2021 from a record first-half, diminishing hopes for sustained growth from the top global buyer and denting market sentiment just as US farmers look to sell their new crop.

According to a report from Reuters, a collapse in hog sector profitability and a sharp rise in wheat feed use are crimping demand in China, where imports this year may now be less than 100 million tonnes, compared with a recent US forecast of 102 million tonnes.

As China accounts for 60% of global soybean imports, its diminished appetite – just as US farmers pull in what is projected to be their third-largest harvest ever – stands to add further volatility to the critical crop, which rallied to nine-year highs this year.

“Soymeal demand is reaching rock bottom. Basis is now at minus 120 yuan (in northern China), lowest this year. Demand might come back up, but it sucks now,” said a manager with a crusher in northern China that processes two cargoes of soybeans on average per month. “We can’t really place orders to make purchases. The volume of U.S. soybean exports will surely be affected.” His plant only had one cargo booked for August, while normally it would have been fully booked until after October. As it stands, crushers in key soy processing hub Shandong would lose nearly 400 yuan with each tonne of the oilseed crushed.
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