China’s soybean imports could be poised to revive, in the face of a boost to its feed demand stemming from soaring pork prices, US officials believe.

China’s soybean imports in the first seven months of 2022 imported 54.17m tonnes of soybeans, a dip of 5.9% year on year, according to customs data.

The pace of decline, which is attributed to weak crush margins in the face of buoyant international soybean prices, reached 9.1% in July, when imports were recorded at 7.88m tonnes.

“China’s demand has not been as strong in 2022 as previously expected,” a report from the US Department of Agriculture’s bureau in Brasilia released overnight said.

‘Demand could rebound’

However, a rebound could be on the way, as the forthcoming US soybean harvest spurs a boost to world supplies, which have been undermined by a disappointing 2021-22 crop in Brazil, the top exporter.

“In the face of Brazil’s crop reduction, China has been postponing its purchases to the second half of 2022, with the expectation that abundant production in the United States will put pressure on prices,” the report said.

Indeed, “USDA projects that China’s soybean demand could rebound with increasing demand for animal feed”, the briefing added.

“China continues to rebuild its swine herd that was decimated in 2019 by a severe outbreak of Africans swine fever (ASF),” with the trend buoyed by pork producer margins that “have been improving considerably, reflecting a rise in meat prices”.

‘Greater volumes of feed’

The bureau said that, according to its sources, “pork prices in China increased by about 60% from early May”.

Greater pork demand, “in addition to guaranteeing better margins, also encourages Chinese pig farmers to return to the normal pig slaughter cycle, holding the animals for longer, and demanding greater volumes of feed”.

Data from China’s National Bureau of Statistics last week showed pork prices up by 20.2% year on year in July – with the increase from June even larger, at 25.6% – in gains attributed to recovering demand at a time when a diminished herd, and farmer withholding, had undermined supplies reaching the market.

The USDA in Friday’s monthly Wasde report restated a forecast for China importing 98.0m tonnes in 2021-22, which indeed implies a marked uptick in the pace of buy-ins, which amounted to 76.7m tonnes in the first 10 months of the marketing year.

‘Desire to ramp-up imports’

The overnight report also forecast growing consumption of Brazil’s soybeans by the country’s own processors, seeing the crush rise by 900,000 tonnes year on year to a record 49.15m tonnes in 2022-23, as starts next February.

The estimate reflects expectations of an improved harvest, and of buoyant demand for both soyoil and soymeal domestically and on export markets.

For soyoil exports, “one major determining factor is the war between Russia and Ukraine, which has dramatically reduced the availability of sunflower oil on the international market, therefore favouring the prices of other vegetable oils, including soybean [oil],” the bureau said.

Separately, Dr Michael Cordonnier, the South America crop expert, said that Brazil’s soymeal shipments could receive a boost from trade deals being negotiated with China.

“China has expressed their desire to ramp-up these imports as soon as possible to avoid potential shortages for their domestic hog and poultry operations,” he said.

“The export of Brazilian corn and soybean meal to China could start before the end of 2022.”

Biodiesel boost

Meanwhile in Brazil’s own market, soyoil needs for making biodiesel “will be supported by a slowly but steadily recovering economy, which will fuel an increase in commercial truck activity”.

Indeed, Brazilian biodiesel producers “hope to increase output in the face of a potential diesel supply shortage”, the bureau said, noting reports that the country “is looking to boost blending again to offset high fossil fuel prices”.

Brazil, which imports about 30% of its diesel, is reportedly mulling an increase to as much as 15%, from the current 10%, in the mandated blend of biodiesel into transport diesel.

“An increase in the blend could reduce diesel imports by five vessels per month out of the typical 20 to 30 ships,” the report said, quoting StoneX estimates.

Abiove, the Brazilian oilseed processors’ industry group, estimates that while crushers could currently supply sufficient soyoil to support a 12% blend, they “would need to crush another 3m tonnes of soybeans to achieve a blend rate of 15%.