In this file:
· Hog virus may matter more for China soy buyers than trade war
… hard to gauge the impact of African swine fever on feed demand…
· China will need to look beyond Brazil for soy as trade war rages
… There's already evidence of a supply squeeze. Brazil's soybean stockpiles are down about 80% from this time last year, and the country's exports fell 8% through July, while cargoes to China dropped 11%. Price premiums for shipments from the country are on the rise…
· Farmer fears China market will never be the same
… Our message (has been) we are a safe, reliable source of food for you. And that’s all changed now…
Hog virus may matter more for China soy buyers than trade war
By: Bloomberg News
via American Journal of Transportation - Aug 08 2019
China, the world’s top soybean importer, is seeking supplies from Brazil through September after it halted U.S. purchases because of the trade war. But for the fourth quarter, processors are hesitant to buy because they find it hard to gauge the impact of African swine fever on feed demand.
The decline in benchmark Chicago soybean futures coupled with an increase in China’s soybean meal prices has made it viable for companies to process Brazilian beans for September loading into meal, according to traders, even with the gains in Brazilian premiums. Crush margins calculated by the China National Grain and Oils Information Center are about the highest in two months.
While processors are in the market for Brazilian beans for August and September, the pace of buying beyond that trails last year, said Hou Xueling, an analyst with Everbright Futures Co. “Crushers are not buying much in advance, and many are concerned that demand for downstream products will fall off a cliff in the fourth quarter” because of the killer hog virus, Hou said.
Many livestock feed producers are pessimistic about sales in the fourth quarter as hog numbers shrink further, Hou said, with some mills expecting pig feed output to plunge as much as 40% in the final three months from a year earlier because farms are not restocking their herds, reducing demand, Hou said.
A survey by the livestock feed association showed that hog feed production slumped 27% in June...
China will need to look beyond Brazil for soy as trade war rages
Tatiana Freitas, Bloomberg
via The Register Citizen (CT) - August 8, 2019
China probably can't count on Brazil alone to fulfill its soybean needs as the Asian country snubs U.S. supplies amid the yearlong trade war.
When President Donald Trump kicked off the tit-for-tat tariff battle last year, Brazil had just finished collecting a bumper crop, allowing the world's biggest soy exporter to almost exclusively meet China's voracious demand. But after shipping record volumes and a growing season that saw weather problems, Brazilian inventories are now dwindling and the next harvest is still months away.
That could create a problem for China, the top soy consumer. After Trump escalated the trade spat last week, the Asian nation halted its purchases of American farm goods. That leaves few alternatives to Brazil. Argentina may be one option, but farmers there are currently hoarding beans amid upcoming elections.
There's already evidence of a supply squeeze. Brazil's soybean stockpiles are down about 80% from this time last year, and the country's exports fell 8% through July, while cargoes to China dropped 11%. Price premiums for shipments from the country are on the rise.
Starting from September, Brazil will only have about 15.7 million metric tons of soy left to ship until crop gathering starts in January, according to Daniele Siqueira, an analyst at AgRural consultancy firm. The forecast is based on total available supply, shipment data through July and what's needed for domestic consumption.
That number would fall short of China's typical demand in the period. The country imported about 7 million tons per month from October through December in the past three years, on average, said Vinicius Ito, derivatives vice president at R.J. O'Brien and Associates, citing official Chinese data.
Prices in Brazil are already climbing amid the outlook for tight supplies. The premium paid for soy shipments in September is up about 32% this month. That's as benchmark futures traded in Chicago fell 1.7%.
"Premiums must be adjusted as there's only Brazil in the game at the moment," Ito said in a telephone interview from New York.
Premiums are still well below records reached last year. That's because China's demand has tapered off a bit. The spread of African swine fever in the country is decimating the country's hog herd, decreasing the need for soybeans in livestock feed.
Meanwhile, the pig disease has raised expectations that China's meat imports will continue to increase to fill the supply gap. That's prompting Brazil's protein producers to raise output and could end up meaning more soy is used domestically, leaving less for export...
Farmer fears China market will never be the same
By Mark Dorenkamp, Brownfield
August 8, 2019
A South Dakota farmer who was instrumental in building the Chinese market doubts China will ever be the customer it once was.
Bob Metz is a past president of the American Soybean Association and long-time board member of the U.S. Soybean Export Council (USSEC). He tells Brownfield he’s been on at least a dozen trade missions to China the last 15 years.
“Our message (has been) we are a safe, reliable source of food for you. And that’s all changed now. You can’t be a reliable customer when you’re throwing tariffs on the things they’re selling us.”
Metz, who farms in the northeast corner of South Dakota, says he fears the U.S. will become a last resort for Chinese buyers.
And he disputes the notion that America had become too reliant on one market...
more, including audio [11:12 min.]