China’s soybean demand expected to rise on robust hog herd growth

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China’s soybean demand is expected to advance in 2020-21 marketing year (October-September) on stronger than expected hog and sow herd recovery from the African swine fever epidemic, market sources told S&P Global Platts Nov. 19.

China — the world’s largest soybeans importer — is forecast to purchase an all-time high soybean volume of 100 million mt in 2020-21, , according to the latest US Department of Agriculture’s World Agricultural Supply and Demand Estimates report.

However, agricultural analysts expect China to import more volumes of the oilseed in 2021 than the USDA’s forecast due to sharper than expected hog and sow herd recovery from African swine fever, or ASF, in the country.

Analysts pointed out that in the calendar year 2020 itself, China is estimated to import 100 million mt of soybeans and the country’s pig herd has not fully recovered yet.

As of Oct. 31, roughly 88% of hog production has recovered to pre-ASF level, the latest survey and statistics report by China’s Ministry of Agriculture and Rural Affairs showed.

Both sow and hog population registered a consistent growth in China, with hog population touching 378 million heads, up 27% on the year, and sow population recovering for the 13th consecutive month and was seen at 32% higher on the year, MARA said.

“If the current growth trend continues, China’s hog production capacity is likely to fully recover as soon as March 2021,” Xin Guocang, an official from China Agriculture and Rural Affairs Ministry said in a national television interview Nov. 16.

Since the beginning of the year, 15,000 large-scale pig farms have resumed operations, with another 13,000 built recently to process and supply pork domestically, he added.

China is the world’s largest pork producer and consumer. The country lost over 50% of its swine population to ASF, which began in August 2018. Following large scale quarantine measures and culling of more than 200 million pigs, the country’s pig population has been on the path of recovery since late-2019.

China’s pig farming sector witnessed a rapid consolidation in the last two years and small-scale farms were amalgamated into big entities under the government’s directives, a Beijing-based consultancy said. As a result, not only the ASF was controlled, China’s pork industry also gained economies-of-scale.

China accounts for 65% of world’s soybeans trade and processes over 80% of its imported soybeans into animal feed.

According to the analysts, soybeans futures prices are expected to gain long-term support from China’s firm soybeans demand on the back of steady pork industry consolidation.

Source: Platts

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