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Brazil May soybean exports fall 2% on year on China swine fever: Conab

Brazil’s May soybean exports fell to 10 million mt, down 2% year on year, Brazilian national crop agency Companhia Nacional de Abastecimento (Conab) said Thursday, as an outbreak of swine fever in China hit demand.

“African swine fever outbreak in China is the primary reason for the year-on-year decline in May soy exports,” Conab said.

China is the largest buyer, taking over 75% of Brazilian soybean exports during January-April, Brazilian economy ministry data show.

The ASF outbreak in China started last August and has a 100% mortality rate for pigs, agricultural consultancy JCI China said.

ASF has led to significant decline in pig feed across China as sow and hog inventories deplete, a monthly US Department of Agriculture report said. China’s Ministry of Agriculture and Rural Affairs has acknowledged that the ASF situation remained serious, the report said.

“The pig herd in China has declined by 20% due to ASF and China’s feed demand and soybean imports are projected to fall dramatically from earlier forecasts,” the USDA said.

Soybean is processed into soy meal, which is used as animal feed.

“China imported 34.8 million mt of soybeans during the first half of the 2018/19 marketing year (October-September), a 7.8 million mt reduction as compared to average imports during the first half of the previous two years,” the USDA said.

“Low international beans prices and port premiums were the additional reasons for declining Brazilian soybean exports in May” Conab said.

On Wednesday, Platts assessed FOB Santos (July) soybeans at $360.47/mt and FOB Paranagua (July) soybeans at $360.47/mt, while FOB New Orleans (July) soybeans were assessed at $335.84/mt.

Brazilian soybean exports could rise due to an escalation of the US-China trade dispute, as China starts buying more from Brazil, sources said.

Last July, China put an additional 25% import tariff on US-origin soybeans in response to tariffs the US placed on Chinese goods. As a result, US soybean exports to China from September to February fell 85% year on year to 4 million mt, as Chinese buyers looked to Brazil.

On May 5, US President Donald Trump threatened to escalate the dispute with fresh tariffs on Chinese goods, amid slow progress in trade talks.

In March, Brazil’s export share in the Chinese soybean market rose to 57%, an increase of 16 percentage points year on year, while the US share declined 24 percentage points on the year to 31%, Chinese customs data show.

In April, Brazil exported 5.78 million mt of beans to China, which was more than four times higher than its nearest rival, the US, which is also the world’s second-largest beans exporter.

ASF CHALLENGE ASF remains the main worry for Brazilian soybean farmers, as the Chinese demand for beans is expected to fall drastically in the coming months.

“African swine fever in China will be a game changer for the global oil seed complex, and soybeans in particular, in the coming years,” the USDA said.

S&P Global Platts Analytics has estimated a 15% year-on-year decline in soybean imports by China to 80 million mt in 2018/19.

There is oversupply and low demand for soybeans, and the Chinese hog population may not recover until early next year, Futures International senior commodity analyst Terry Reilly said.

“In addition, if the ASF virus continues to spread across Asia, soybean imports by other countries may also decline,” he said.
Source: Platts

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