In this file:
· China’s soybean demand is ‘surprisingly’ strong despite continued swine fever outbreak
That could be due to farmers switching from food waste to manufactured feed for their herds, he says.
· Region could feel swine fever blow for next decade, Cargill says
… The switch to poultry is helping to keep China’s demand for soybean meal from cratering, Fering said. Prices are also attractive relative to other vegetable proteins, helping keep soy meal in feed rations, he said...
China’s soybean demand is ‘surprisingly’ strong despite continued swine fever outbreak
· Soybean demand seems to be unusually strong in China despite the widespread culling of pigs due to swine fever, says Darin Friedrichs, senior Asia commodity analyst at INTL FCStone.
· That could be due to farmers switching from food waste to manufactured feed for their herds, he says.
· China’s use of soybeans is an important metric for the country’s trade relationships.
Huileng Tan, CNBC
Jul 8 2019
Soybean demand in China appears to be surprisingly robust despite the widespread culling of pigs due to African swine fever.
That may be indicating that farmers are switching from food waste to manufactured feed, according to one analyst, which could mean better-than-expected demand will persist.
The Chinese use of soybeans is an important metric for the country’s trade relationships. Since China is the world’s top buyer of the oilseeds, it could give some support to American exports as shipments for the current marketing year may be on pace to top U.S. government forecasts, a recent Reuters analysis showed.
China’s sustained demand for soybeans has been called into question not just by trade war tensions but also by a raging outbreak of African swine fever, which has forced farmers to cull a significant percentage of their pigs.
Nevertheless, China’s need for the feed material seems to be defying expectations.
“The soybean crushing rate and soybean demand is down compared to last year at this time, but is still surprisingly strong given how many hogs China has lost,” said Darin Friedrichs, senior Asia commodity analyst at INTL FCStone.
“If China loses about 40% or more of their hogs, we would normally assume soybean demand would be down a large amount as well. At this point it’s maybe only down 5-10% or so which is surprising,” Friedrichs told CNBC.
However, China-based firms such as Cofeed are estimating year-to-date figures for certain soybean processing fell just 3.6% from a year ago, Friedrichs said.
Analysts have been struggling to assess the severity of the virus on China’s pig herds. Dutch agribusiness lender Rabobank said in a June report that losses in pig herd are “difficult to estimate” and could be anywhere from 20% to 70%.
China, which produces half the world’s pork, said in June its sow herd declined by a record 23.9% in May from a year ago, a slightly deeper drop than for the overall pig herd, Reuters reported. The government’s figures have, according to Rabobank, represented “one of the most optimistic estimates we have seen.”
The decline in pork supply in China has pushed up prices of food in the country and spurred consumers to eat other proteins such as chicken or seafood.
However, alternative meat sources such as poultry or seafood do not consume as much feed as pigs, said Friedrichs.
“Even if every pound of pork lost was exactly replaced by one pound of poultry, the overall soybean demand would be lower,” Friedrichs added in his report.
So, “perhaps this all comes down to the question of how much food waste was being fed to hogs,” Friedrichs said.
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Region could feel swine fever blow for next decade, Cargill says
Mario Parker & Isis Almeida, Bloomberg
via Macau Daily Times - July 8, 2019
It could be as long as a decade before China recovers from its outbreak of African swine fever, the deadly pig disease that’s decimating hog herds in the world’s largest pork consumer.
That’s according to Cargill Inc., one of the world’s largest agricultural commodity traders. The virus, which kills most infected pigs within 10 days, has already spread to most Chinese provinces. Official reports of a 24% decline for the nation’s herd are “conservative,” said John Fering, managing director for Cargill’s premix and nutrition business in the Asian nation.
China’s hog-herd losses are tough to estimate and could be anywhere between 20% and 70%, according to Rabobank.
“This is not a short-term event,” Fering said by phone. “This is going to take several years, if not a decade, to fully achieve structural recovery.”
The virus was first reported in China in August. Since then, there have been more than 140 outbreaks, forcing the nation to boost meat imports. While the government has tightened animal-safety controls, the structure of the country’s hog industry, with many backyard operations, has made it harder to stop the spread of disease.
China has boosted its pork imports, but demand has also increased for other meats in substitution. The nation’s consumers “aren’t discriminating between a disease that only affects the hog and what can be transmitted to humans,” turning them off from wanting to eat pork and reducing consumption, Mizuho said in a report last month.
“Substitution to alternative sources is one part of the solution to close the gap” between protein supply and demand, Fering said. Poultry is likely to be the top beneficiary, both in terms of China’s domestic market and overseas, he said. Eggs will come second, followed by beef and aquaculture.
The switch to poultry is helping to keep China’s demand for soybean meal from cratering, Fering said. Prices are also attractive relative to other vegetable proteins, helping keep soy meal in feed rations, he said...