China’s Imports of US Soybeans Set to Fall by 20% in 2021/22

Published 2021년 12월 8일

In 2021/22, China’s imports of US soybean are forecast to drop significantly compared to the previous season due to loading delays caused by Hurricane Ida and an early Brazilian soybean harvest. China’s imports of US soybeans in MY 2021/22 could fall by about 20% to 30 million tonnes. China is the world’s largest soybean importer, purchasing more than 50% of the yearly US soybean crop. US growers have recently completed harvesting their second-largest soybean crop on record and shipped around 45-50% of annual output. China purchases most of the US’s crop, concluding 70% of its deals during the post-harvest window (September - December).

Hurricane Ida leads to loading delays

According to the US Department of Agriculture (USDA), Hurricane Ida hampered crop-loading at major US ports in September, resulting in shipments destined for China decreasing by 81% during that month compared to the year before. Chinese soybean demand has been driven by soybean crushing and pig production margins. However, these drivers of soybean demand dropped during the peak US soybean harvest period. Crop loading in the US rose sharply in October, reaching more than 10 million tonnes.

Early Brazilian harvest hampers US export season

Leading soybean exporters and destinations during 2016/17 (Source: USDA)

US soybean exports to China in 2020/21 were the highest since the 2016-17 season, mainly due to the delayed start to Brazil’s 2021 soybean export season. According to Mysteel, a Chinese commodities consultancy, this will not be the case in 2021/22, as Brazilian soybean planting has occurred faster this year so that there will be enough supply to ship to China in Q1 of 2022. US soybean prices fell as the country’s export offers traded close to those out of Brazil, where freight costs to China are lower.

Chinese soybean processors also benefit from the favorable crush margins delivered by the higher average protein levels in Brazilian soybeans. Margins for US soybeans exported from the Pacific Northwest for February delivery are around USD 78.49 per tonne, compared with USD 107.37 for Brazilian soybeans.

Chinese soybean buyers have almost completed December purchases, and are currently concluding January and February deals, as the Brazilian soybean export season picks up.

January soybean exports from the Gulf Coast were priced at about USD 500 per tonne (FOB) in November, and freight costs to China ranged between USD 78 and USD 80 per tonne. The export price for Brazilian soybeans is approximately USD 520 per tonne (FOB), with freight costs reaching USD 60 per tonne. According to Mysteel, November and December arrivals of soybean to China will mainly originate from the US. However, Brazilian shipments are forecast to increase significantly between January and March to over 6 million tonnes, a rise of more than 400% compared to the 1.35 million tonnes during Q1 of 2021. China accounts for almost 60% of all global soybean imports, making the Chinese market hard to replace as the EU, Mexico, Argentina, Egypt, and Thailand collectively purchase only a third of China’s total soybean imports.

Hog production drives Chinese soybean demand

Hog production margins will be a significant factor in determining the Chinese soybean demand in 2022. A rise in China’s pork output in 2021 caused margins to drop to record lows, slashing the sector’s appetite for soybean meal feed. However, pork prices and hog margins are recovering, which could boost soybean consumption and benefit Brazilian importers, as Brazilian soybeans have a high protein composition.