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China's demand for soybeans has attracted a lot of market attention now. However, not because of its already known strength, but because of its recent absence, even if occasional, with new purchases both in the United States and in Brazil. This week, however, the Chinese returned to buying in the Brazilian market, according to information gathered by Agrinvest Commodities, somewhere between 15 and 18 ships of the oilseed.
“And that ended up confirming our awards. Premiums for July, which reached minus 40 cents per bushel in relation to Chicago – lowest level since 2018 – are now back and are at minus 16 cents. Good news for us, but bad news for the United States, because our soy is much cheaper than theirs and competes directly with the American export program”, explains Eduado Vanin, market analyst at Agrinvest.
In April, the numbers of Brazilian soybean imports by China were already surprising due to the high volumes that arrived in the country of the product from Brazil. There were 5.08 million tons, compared to just over 315 thousand tons in March. And although last month's total is lower than the same in 2020, the outlook remains positive.
After all, as Vanin explains, Brazilian soybeans are now the cheapest in the world for the Chinese and this is a situation that should last at least until the period from August to September when, little by little, buyers begin to turn for the new supply arriving from the 2021/22 harvest in the United States.
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CHANGES IN ANIMAL FOOD
Also according to information from Reuters International, processors increased their purchases, anticipating a greater demand for animal feed in the coming months given a recovery in pig farming that continues to be sought by Chinese producers.
At the height of the recovery, new outbreaks of African Swine Fever were identified, in addition to other zoonoses, and made movement difficult. At the other end, the prices of pigs and pork were suffering aggressive drops, further compromising the situation.
Thus, crushing margins in China were also going through very difficult times due to high soybean prices, containing demand, even if occasionally. Punctually because, as the numbers show, soybean imports by the Asian nation in April, accounting for all origins, totaled 7.45 million tons, 11% more than a year ago.
Recently, China's Ministry of Agriculture and Rural Affairs ordered animal nutrition experts to work on formulas with less use of soybean meal, which has already been confirmed in some companies.
According to news reported by the international portal Global Times, New Hope Liuhe, the largest Chinese feed industry, is already using only 10% of bran in its products since the end of April, compared to 13.2% in 2019 and 2012. 5% of 2020.
“We have been adopting other types of bran and proteins to meet and guarantee the nutritional needs of pigs and chickens,” the company told the Global Times, guaranteeing that it had already been working on the change even before the recent changes in global oilseed trade.
LESS DEPENDENCE ON IMPORTS
The Ministry of Agriculture's objective is to reduce China's dependence on the use of soybean meal and, consequently, on imports, which are expected to break a new record this season, potentially exceeding 100 million tons.
However, experts affirm and recognize that this is a movement that would only consolidate and, in fact, bring less dependence in the long term.
SMALLEST AREA PLANTED WITH SOYBEANS?
Yes. The projection is that the area planted with soybeans in China will be approximately 5.4% in this 2021/22 harvest and reach just over 9.3 million hectares, according to projections by the local Ministry of Agriculture. The retreat would be to give more space to corn, which is expected to see its area grow by more than 3% in this new season.
By: Carla Mendes | Notícias Agrícolas
