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Column: China picks up American beans as its pig herd comes under scrutiny

NAPERVILLE, Ill., Nov. 17 (Reuters) – China has had a sporadic presence in the US soybean market of late, although last week’s purchases were unexpectedly large and likely much needed as the largest importer’s bean stocks are running low.

However, China’s pig industry, the world’s largest, could be on rocky ground, as evidenced by higher pig prices, suggesting supply has fallen and pork imports may need to increase again.

China accounts for 60% of the world’s soybean imports, and upon arrival the beans are ground into protein-rich pig feed to support the country’s strong appetite for pork.

China is also a top importer of pork, which could counter the need for soybeans if increased pork imports are a result of lighter pig production. When soybean imports are high, this often indicates a healthy demand for feed and a sufficiently large pig herd.

Chinese soybean meal prices hit record highs in October as supply tightened after months of lower soybean imports, and prices remain close to those levels. Last month’s bean supply unexpectedly fell to an eight-year low due to logistical problems in the US the previous month, although US exports have since increased sharply.

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

Chinese soybean and pork imports

By mid-2020, China’s pork imports were four times their previous averages of about 100,000 tons per month, and remained high for most of 2021. The June 2022 volume of 120,000 tons was the lowest in more than three years.

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China reported that its sow herd was down just 4% year-on-year in September, though live pig prices rose last month to the highest level since early 2021. Analysts there say such strong prices would be unlikely without problems with the pig herd. China insists that breeding capacity is sufficient.

China has yet to increase pork purchases from the United States, one of its top suppliers. Sales have been modest but stable since early 2021, the last time China imported larger quantities. Through Nov. 10, U.S. pork sales to China for 2022 were at a four-year low and nearly half their year-ago levels.

China’s pork imports have risen slightly since the mid-year slump on the back of a notable increase in Brazilian shipments since the beginning of this year. US shipments to China also reached their highest level in more than a year in August, but the difference is narrowing.

Through October, soybean imports into China in 2022 at 73.2 million tons were 7.5% lower than the previous year. U.S. purchases for shipment through August 2023 totaled nearly 21 million tons as of Nov. 10, up 12% from the same time last year, when lighter Chinese purchases related to U.S. exporters.

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

Karen Braun is a market analyst at Reuters. The views expressed above are her own.

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Written by Karen Braun Edited by Matthew Lewis

Our standards: The Thomson Reuters Principles of Trust.

Opinions expressed are those of the author. They do not reflect the views of Reuters News, which is committed to integrity, independence and freedom from bias under the Trust Principles.

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