Column: China buys US beans as its pig herd remains under scrutiny

NAPERVILLE, Ill., Nov 17 (Reuters) – China has been sporadically in the U.S. soybean market of late, though its purchases last week were unexpectedly large and likely badly needed as bean supplies from the top importer have tightened. .

However, China’s pork industry, the world’s largest, could be on rocky ground as evidenced by higher hog prices, suggesting that supplies have dwindled and pork imports need to rise again.

China accounts for 60 percent of global soybean imports, and upon arrival, the beans are crushed into protein-rich pig feed to satisfy the country’s strong appetite for pork.

China is also one of the top importers of pork, and that may offset the need for soybeans if rising pork imports are the result of lighter hog production. When soybean imports are strong, that often indicates healthy demand for feed and a large enough hog herd.

Soymeal prices in China hit record highs in October as supplies tightened after months of lighter soybean imports, and prices remain near those levels. Last month’s bean arrivals unexpectedly fell to eight-year lows due to US logistics problems the previous month, although US exports have risen sharply since then.

China substantially increased pork imports in 2019 after the disease spread through its pig herd starting in 2018, potentially killing up to 40% of the country’s pigs. Soybean imports were less robust during this period, which coincided with the trade war, when China shunned US products.

Chinese soybean and pork imports

In mid-2020, China’s pork imports were four times higher than previous averages of around 100,000 tonnes per month, remaining elevated through most of 2021. The June 2022 volume of 120,000 tonnes was the lowest in more than three years.

China reported its sow herd as of September was down just 4% on the year, though prices for live hogs last month rose to the highest levels since early 2021. Analysts say such high prices would be unlikely without pig population issues. China maintains that the breeding capacity is sufficient.

China has yet to increase purchases of pork from the United States, one of its main suppliers. Sales have been modest but steady since early 2021, the last time China made larger purchases. As of November 10, US pork sales to China for 2022 were at four-year lows and nearly half the prior-year level.

Pork imports from China have risen a bit since the mid-year slump due to a notable increase in Brazilian shipments since the beginning of this year. US shipments to China in August also reached the highest levels in more than a year, but the gap is smaller.

Through October, China’s 2022 soybean imports of 73.2 million tons were down 7.5% on the year. Its US purchases for shipment through August 2023 were close to 21 million tonnes as of November 10, up 12% from the same period last year, when lighter Chinese purchases concerned exporters of USA

The wild card remains China’s economic health, including its demand for agricultural products, as the country took a very restrictive approach in the post-pandemic era. Beijing recently eased its COVID-19 policy, though cases are currently rising, and it’s unclear whether the government will be comfortable with looser control.

Karen Braun is a Reuters market analyst. The opinions expressed above are their own.

Written by Karen Braun Edited by Matthew Lewis

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The opinions expressed are those of the author. They do not reflect the views of Reuters News, which, according to the Trust Principles, is committed to integrity, independence and non-bias.

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