Oilseeds. World Markets and Trade. November 2018 - USDA Ноя. 8, 2018
China Soybean Imports Lowered
Imports down 16 Million Tons Since June
With a 4-million-ton cut in China’s soybean import forecast this month, projected imports combined for both 2017/18 and 2018/19 have fallen 16 million tons since the start of trade tensions and retaliatory tariffs. This includes 3 million tons for 2017/18 and 13 million tons for 2018/19. Imports for 2018/19 are now forecast at 90 million tons.
A portion of this decline is offset by the higher use of domestic supplies. However, most of the decline is in response to lower protein feeding for livestock. While growth in China’s SME (soybean meal equivalent) demand remains positive, the rate of increase has declined. A recent announcement by a feed association advising industry to lower inclusion of protein in feed rations could reduce demand for imported soybeans.
Since the beginning of the current trade tensions, purchases of U.S. soybeans by China have evaporated, with many previously booked sales being canceled. The few quantities that were shipped after the imposition of duties have either been diverted to other markets (Vietnam, Singapore, and South Korea) or are currently languishing off the coast of China, waiting to be discharged. With Chinese buyers showing little interest in U.S. soybeans, this month’s reduction in the forecast in China’s imports is reflected in a similar reduction in the U.S. export forecast.
Though China is shunning U.S. beans and the 2018/19 U.S. soybean export forecast has also declined since USDA’s initial forecast in May, the total reduction (about 9 million tons combined across both 2017/18 and 2018/19) is only about half the decline in China’s imports given the stronger demand for U.S. soybeans in other markets. Factoring in the larger U.S. soybean crush, in response to higher margins and demand for meal, results in even less impact of lower China demand on U.S. soybean disappearance. While overall lower U.S. soybean disappearance, resulting from reduced exports, ultimately ends up in stocks (and pressures prices), this year’s larger production -- up nearly 9 million tons from the initial forecast in May -- represents the largest share of forecast stockbuilding in 2018/19.
OVERVIEW FOR 2018/19
Global oilseed production is forecast lower this month at 599.6 million tons. Soybean production is down to 367.50 million tons as reductions for Argentina and the United States more than offset gains in China, India, and Ukraine. Rapeseed production has been cut to 71.0 million tons on reductions for China and Australia. The peanut crop is down this month following reductions for China and the United States. Cottonseed production is down as well, following losses in India, Pakistan, Turkmenistan, and the United States. The sunflower crop is up slightly on gains in the European Union and Russia. Global soybean imports are down, mainly driven by China. Soybean exports are down as projected lower exports for the United States more than offset gains for Brazil, Russia, and Ukraine. Global soybean stocks are raised significantly this month, driven by the United States and Argentina. The U.S. season-average farm price for soybeans is projected unchanged at $8.60 per bushel.
U.S. soybean export bids in October, FOB Gulf, averaged $325/ton, up $13 from September. In comparison, FOB Brazil Paranagua averaged $414/ton, up $17 from September. FOB Argentina Up River averaged $395/ton, up $15 from previous month. Export prices in the United States continue to be lower compared to other suppliers due in part to ongoing U.S.-China trade tensions. In addition, in the first half of October, U.S. prices saw an uptrend most likely supported by a slowdown in harvest progress; however, in the second half of the month, prices softened, likely pressured by favorable weather conditions during harvest and burdensome supply prospects. The beginning of November brought a small boost to U.S. soybean prices, most likely supported by large September crush volumes as confirmed by the NASS Grain Crushings and Co-Products Production report.
U.S. soybean meal export bids in October, FOB Gulf, averaged $360/ton, up $3 from September. In comparison, FOB Brazil Paranagua averaged $350/ton, up $1 from previous month. FOB Argentina Up River averaged $341/ton, down $1. It is likely that ongoing U.S.-China trade tension has reduced the incentive to crush soybeans in South America, which coupled with lower soybean supplies in Argentina, contributes to tighter meal inventories, supporting meal prices.
Soybean oil prices have been trending lower, most likely due to larger crush and higher oil output in Brazil. Additionally, soybean crush margins continue to be very good in the United States, boosting oil production and consumption for both biodiesel and food. Ample stocks of palm oil in Indonesia and Malaysia continue to pressure prices lower. Although imports by the European Union and China have accelerated in the last few months, India’s demand has been slashed significantly.
For the week ending November 1, U.S. 2018/19 soybean export commitments (outstanding sales plus accumulated exports) to China totaled 977,000 tons compared to 17.1 million a year ago. Total commitments to the world were 21.8 million tons, compared to 31.5 million for the same period last year.
Accumulated soybean exports in the new marketing year were at 8.6 million tons, which is 41 percent below the same period last year. Accumulated soybean exports to China were at 407,000 tons, which is 96 percent below or 9.9 million tons less compared to last year. Shipments to the rest of the world were 71 percent above last year’s (2.5 million tons more); however, they have not fully offset reductions for China.
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