Caixin
May 14, 2020 08:14 PM
ECONOMY

China’s Pigs Gobble Up Brazilian Soybeans

Brazil’s soybean exports are spiking as China’s pig herd recovers from deadly African swine fever, driving demand for the feedstock.

Brazil is expected to export about 84 million tons of soybeans in the 2019-2020 marketing year from October 2019 to September 2020, up nearly 10 million tons from the previous marketing year, the U.S. Department of Agriculture (USDA) said in a Tuesday report.

Brazil exported a record high 16.3 million tons of soybeans in April, up more than 70% year-on-year, government data showed. China, the world’s largest soybean importer, purchased about three quarters of Brazil’s soybean exports in March, the state-run Xinhua News Agency reported (link in Chinese), citing data from the Brazilian National Association of Grain Exporters.

“Expansion of China’s swine herd, recovering from African Swine Fever, will help boost feed demand and drive both crush and import demand higher,” the USDA said in the report. “China is projected to account for over half of global consumption growth in 2020/21 and roughly 85 percent of import growth.”

In China, African swine fever which was first reported in August 2018 wiped out a significant portion of the country’s pigs, pulling soybean consumption down due to slower feed demand. Signs of recovery emerged in October 2019 when the inventory of breeding sows registered their first month-on-month increase since the outbreak began.

China’s Ministry of Agriculture and Rural Affairs on Tuesday increased its soybean import forecast to 91 million tons (link in Chinese) for the 2019-2020 marketing year, up 3.3 million tons from its April estimate.

Brazil is a major grower of soybeans and the largest supplier to China, in large part due to the high price-to-quality ratio of its beans. The country’s soy exports have also benefited from the China-U.S. trade war, as China sought alternatives to U.S. suppliers.

Despite the impact of the Covid-19 pandemic, Brazil is expected to harvest some 120 million tons of soybeans in the 2019-2020 year, surpassing the U.S. to become the world’s largest soybean grower, according to an April report from the Brazilian Soybean Producers Association.

However, Brazil may be challenged by the U.S.-China trade deal, under which China committed to boost its purchases of U.S. soybeans, market insiders say. According to the USDA report, U.S. soybean exports to China totaled 13.5 million tons from October 2019 to April 2020, including outstanding sales, up 0.2 million tons year-on-year.

Contact reporter Tang Ziyi (ziyitang@caixin.com) and editor Gavin Cross (gavincross@caixin.com)

Caixin Global has launched Caixin CEIC Mobile, the mobile-only version of its world-class macroeconomic data platform.

If you’re using the Caixin app, please click here. If you haven’t downloaded the app, please click here.

You've accessed an article available only to subscribers
VIEW OPTIONS
Share this article
Open WeChat and scan the QR code