https://news.sina.com.cn/c/2018-11-24/doc-ihmutuec3116108.shtml
Original title: The whole world is asking: How does China do not buy American soybeans?
Earlier this year, Sino-US trade disputes escalated. At that time, most market participants believed that China could never completely stop importing US soybeans because of the huge consumption.
However, the weekly export volume of US soybeans has reached a typical peak, and Chinese buyers are still missing, which makes analysts worry that China may have done something impossible.
This is either because Brazil's exportable soybeans exceeded expectations, either China's soybean reserves were higher than reported, or China's demand slowed. Mostly, it is the result of the interaction of the three. China is still rejecting US soybeans, leaving many of its previous forecasts unsuccessful.
For more than a decade, China has dominated the global soybean market, accounting for nearly a third of total consumption. But since China imposed import tariffs on US soybeans, the soybean trade between the two sides has actually stopped. The United States is the world's second largest soybean exporter.
▲ Soybeans grown on a farm in Missouri, USA (Reuters) ▲ Soybeans grown on a farm in Missouri, USA (Reuters)
According to the US Department of Agriculture's port inspection data, since the end of July, less than 500,000 tons of US soybeans have been shipped to mainland China. In contrast, between August and November 2017, nearly 18 million tons of US soybeans were shipped to China.
China is fortunate that the soybean harvest of Brazil, the number one soybean exporter, reached a record size earlier this year. And despite warnings that Brazil's soybeans will be warned at the end of 2018, the country's export rate continues to maintain record levels.
During the first half of November, Brazil exported 2.6 million tons of soybeans, which exceeded the previous month's highest monthly record of 2.14 million tons. The export volume in October was 5.35 million tons, more than twice the highest in the same period of the previous year.
▲Source: Reuters ▲Source: Reuters
From some point in the past few years, China's soybean demand has become seemingly indestructible and will grow every year. But perhaps the situation is now reminding us that China's demand will still be subject to the same market forces that all commodities encounter: price.
China's Dalian Commodity Exchange's main contract for soybean meal increased by 20% from the beginning of the year to the beginning of October. Since then it has fallen by about 10%, but the contract is still at a five-year high, which inhibits demand.
China has used a large amount of soybean meal as a feed for pigs, but the Chinese government released new feed regulations last month to reduce the protein content of animal feed. This is another strategy that the outside world expects China to use to reduce soybean demand. But so far, the price increase of soybeans and soybean meal is considered to be a more lethal factor.
Has China been over?
As we all know, Brazil usually exhausts its annual supply of soybeans, and market observers have been patiently waiting for China to face a shortage of soybeans.
Under normal circumstances, China will rely heavily on US soybean supplies from October to January. But as of mid-November, China’s US soybean sales were only 714,000 tons (and continue to shrink).
According to the industry portal website granary, as of November 11, China's port soybean stocks totaled 7.5 million tons, about 33% higher than the same period of last year, but lower than the record high of 9 million tons in mid-October. Based on estimates of China's consumption rate, these stocks can only last for less than four weeks.
▲Source: Reuters ▲Source: Reuters
But there are probably some national reserves of soybeans in China. The US Department of Agriculture estimates that the maximum is 8 million tons, which means that with these national reserves and port soybean stocks, if the consumption is at a steady rate, China's supply can only support eight weeks.
It seems that the supply may be low, but since the new Brazilian soybeans will enter the market early next year, the actual supply may be sufficient. If this is the case, then China will survive the critical period of lower supply in South America without importing US soybeans.
The crop that Brazil is about to mature is certainly a force to be reckoned with. Soybean planting in the largest producing area of Mato Grosso has been completed, and the planting speed is about 10 percentage points higher than the previous fastest speed at the end of 2016, setting a record high.
As of Monday, Parana, the second-ranked state, has completed 95% of soybean cultivation, which is in line with last year's record planting speed.
At the beginning of 2017, 20% of soybeans in Matos Grosso had been harvested before the end of January, and half of the harvest in mid-February was completed, which means that Brazil's new soybeans should be ready for export only after two months.
Source | Reuters Chinese
Editor in charge: Liu Debin SN222
Original title: The whole world is asking: How does China do not buy American soybeans?
Earlier this year, Sino-US trade disputes escalated. At that time, most market participants believed that China could never completely stop importing US soybeans because of the huge consumption.
However, the weekly export volume of US soybeans has reached a typical peak, and Chinese buyers are still missing, which makes analysts worry that China may have done something impossible.
This is either because Brazil's exportable soybeans exceeded expectations, either China's soybean reserves were higher than reported, or China's demand slowed. Mostly, it is the result of the interaction of the three. China is still rejecting US soybeans, leaving many of its previous forecasts unsuccessful.
For more than a decade, China has dominated the global soybean market, accounting for nearly a third of total consumption. But since China imposed import tariffs on US soybeans, the soybean trade between the two sides has actually stopped. The United States is the world's second largest soybean exporter.
▲ Soybeans grown on a farm in Missouri, USA (Reuters) ▲ Soybeans grown on a farm in Missouri, USA (Reuters)
According to the US Department of Agriculture's port inspection data, since the end of July, less than 500,000 tons of US soybeans have been shipped to mainland China. In contrast, between August and November 2017, nearly 18 million tons of US soybeans were shipped to China.
China is fortunate that the soybean harvest of Brazil, the number one soybean exporter, reached a record size earlier this year. And despite warnings that Brazil's soybeans will be warned at the end of 2018, the country's export rate continues to maintain record levels.
During the first half of November, Brazil exported 2.6 million tons of soybeans, which exceeded the previous month's highest monthly record of 2.14 million tons. The export volume in October was 5.35 million tons, more than twice the highest in the same period of the previous year.
▲Source: Reuters ▲Source: Reuters
From some point in the past few years, China's soybean demand has become seemingly indestructible and will grow every year. But perhaps the situation is now reminding us that China's demand will still be subject to the same market forces that all commodities encounter: price.
China's Dalian Commodity Exchange's main contract for soybean meal increased by 20% from the beginning of the year to the beginning of October. Since then it has fallen by about 10%, but the contract is still at a five-year high, which inhibits demand.
China has used a large amount of soybean meal as a feed for pigs, but the Chinese government released new feed regulations last month to reduce the protein content of animal feed. This is another strategy that the outside world expects China to use to reduce soybean demand. But so far, the price increase of soybeans and soybean meal is considered to be a more lethal factor.
Has China been over?
As we all know, Brazil usually exhausts its annual supply of soybeans, and market observers have been patiently waiting for China to face a shortage of soybeans.
Under normal circumstances, China will rely heavily on US soybean supplies from October to January. But as of mid-November, China’s US soybean sales were only 714,000 tons (and continue to shrink).
According to the industry portal website granary, as of November 11, China's port soybean stocks totaled 7.5 million tons, about 33% higher than the same period of last year, but lower than the record high of 9 million tons in mid-October. Based on estimates of China's consumption rate, these stocks can only last for less than four weeks.
▲Source: Reuters ▲Source: Reuters
But there are probably some national reserves of soybeans in China. The US Department of Agriculture estimates that the maximum is 8 million tons, which means that with these national reserves and port soybean stocks, if the consumption is at a steady rate, China's supply can only support eight weeks.
It seems that the supply may be low, but since the new Brazilian soybeans will enter the market early next year, the actual supply may be sufficient. If this is the case, then China will survive the critical period of lower supply in South America without importing US soybeans.
The crop that Brazil is about to mature is certainly a force to be reckoned with. Soybean planting in the largest producing area of Mato Grosso has been completed, and the planting speed is about 10 percentage points higher than the previous fastest speed at the end of 2016, setting a record high.
As of Monday, Parana, the second-ranked state, has completed 95% of soybean cultivation, which is in line with last year's record planting speed.
At the beginning of 2017, 20% of soybeans in Matos Grosso had been harvested before the end of January, and half of the harvest in mid-February was completed, which means that Brazil's new soybeans should be ready for export only after two months.
Source | Reuters Chinese
Editor in charge: Liu Debin SN222
