Soybeans: Exports Expected to Pick Up Due to Chinese Demand – DTN

    Soybean export sales and shipments may have gotten off to the slowest start since the 2011-12 marketing year, but China’s recent soybean purchase reaffirms that the world’s largest soybean buyer likes having two suppliers.

    China signed agreements to purchase 13.1 million metric tons, or 484 million bushels, of soybeans from the U.S. last month, and those sales are trickling into USDA’s export sales reporting system as the contracts are finalized.

    The slow pace of sales was a concern until the big trade announcement, said Purdue University ag economist Chris Hurt. “Since that time, bean futures have generally been strong, reflecting a shift to the belief that U.S. exports to China will be better than current USDA estimates.”

    USDA lowered its forecast for 2015-16 U.S. exports by 50 million bushels to 1.68 billion bushels in the latest supply and demand report.

    After China’s stock market plunge earlier this year, many market analysts forecast a slowdown in China’s overall economy with its gross domestic product declining to 7% or less and commodity imports dropping steeply.

    “When you think about where the demand is going down, it’s probably not going to be in the agricultural sector,” said Steve Nicholson, an analyst at Rabobank’s Food and Agribusiness Research and Advisory group. “It’s going to be in iron ore, copper, and things that are used in the manufacturing sectors. China’s got to feed people.”

    USDA forecast that China will import 79 mmt of soybeans this year, 2 mmt more than last year.

    Hurt said China’s soybean usage is forecast to grow 6.6% in 2015-16, down slightly from last year’s 7.1% growth in usage. “So, a slower economic growth rate in China is probably pulling the growth rate in soybean usage down somewhat, but slower Chinese income growth is not the primary reason for reductions in 2015-16 U.S. soybean exports,” he said.

    While China’s overall usage is growing, so has its stockpile. Hurt said China let its stock fall a little lower than it would have liked in 2012-13 due to the drought and high prices. It spent the last two years building inventory while prices were lower. Now, China’s beginning stocks are at a record-high level.

    “This means they can slow their rate of increases in imports — in 2013-14 they increased imports by 10.5 mmt and in 2014-15 by an additional 6.6 mmt, but this year USDA is estimating only a 2 mmt increase,” Hurt said. “So it is valid to say that a major driving force for soybeans is China’s slowing rate of growth in imports.”

    The global soybean supply picture has radically changed in the last few years, Nicholson pointed out. Global ending stocks at the end of 2013-14 totaled 63 mmt compared to forecasts of 85 mmt for the 2015-16 marketing year.

    “I think one of the things to keep in mind is that it seems like we’ve been fighting these short supplies of soybeans for the last five to seven years,” he said. “So now the market’s going: I see lots of beans in Brazil, and I see lots of beans in the United States, so why do I need to buy ahead to ensure supply?”

    The U.S. is going to lose some market share to Brazil this year due to currency issues, he said.

    The Chinese yuan has about 3% less buying power compared to the dollar than it did a year ago, which only plays a small part in making U.S.-origin beans more costly to the Chinese, Hurt said. The big impact comes from South America, where the yuan has gained 8% on the Argentine peso and 54% the Brazilian real.

    “That makes the yuan have much more buying power in Brazil and a little more in Argentina,” he said. “Since beans are traded in U.S. dollars, when China buys beans from Brazil, that converts back to a high level of reals for Brazilian producers, and as a result they have incentives to increase soybean acreage. Because of currency depreciation, Brazil is the winner in terms of the volume of their exports being up 9% for 2015-16.”

    Brazil’s official crop reporting agency, Conab, forecasts farmers there will harvest between 100.1 mmt and 101.9 mmt of soybeans, which would be a new record.

    Hurt said there’s still a long way to go in the 2015-16 marketing year, and there are no assurances that record production levels in South America will be met, especially since planting is just getting underway.

    While Nicholson thinks Brazil may gain a share of the Chinese market, it’s not going to take over all of it.

    “They like having two suppliers of soybeans, that way they can take advantage of price and time of year,” he said. “China has the greatest traders in the world, don’t ever forget that. They’ll take the shirt off your back and you won’t even know it. They get an opportunity that most of the rest of us don’t get: to get cheap prices twice a year. They like that.”

    The Latest

    Send press releases to

    View All Events

    Send press releases to

    View All Events