Column: China snaps up U.S. beans while its hog herd remains under scrutiny

NAPERVILLE, Ill., Nov 17 (Reuters) - China has been sporadic in the U.S. soybean market lately, though its purchases last week were unexpectedly large and probably much-needed as the top importer’s bean supplies have run thin.

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

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

China is also a top pork importer, and that can counteract the need for soybeans if increased pork imports are the result of lighter hog production. When soybean imports are strong, that often indicates healthy feed demand and a sufficiently large hog herd.

Chinese soymeal prices hit record highs in October as supply tightened after months of lighter soybean imports, and prices remain near those levels. Last month’s bean arrivals unexpectedly slipped to eight-year lows on U.S. logistical troubles the month before, though U.S. exports have greatly increased since.

China substantially upped pork imports in 2019 after disease spread through its hog herd starting in 2018, potentially killing up to 40% of the country’s pigs. Soybean imports were less robust during this period, which happened to coincide with the trade war, when China was shunning U.S. products.

China soy and pork imports

By mid-2020, China’s pork imports were four times larger than previous averages of around 100,000 tonnes per month, staying elevated through most of 2021. The June 2022 volume of 120,000 tonnes was the lowest in more than three years.

China reported its sow herd as of September was down just 4% on the year, though live hog prices last month rose to the highest levels since early 2021. Analysts there say such strong prices would be unlikely without pig population issues. China maintains 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 steady since early in 2021, the last time China was making bigger hauls. Through Nov. 10, U.S. pork sales to China for 2022 were at four-year lows and nearly half of the year-ago level.

China’s pork imports have risen a bit since the mid-year slump due to a notable increase in Brazilian shipments since the beginning of this year. U.S. shipments to China in August also reached the highest levels in more than a year, but the difference is slighter.

Through October, China’s 2022 soybean imports of 73.2 million tonnes were down 7.5% on the year. Its U.S. purchases for shipment through August 2023 were close to 21 million tonnes as of Nov. 10, up 12% from the same time last year, when lighter Chinese purchases were concerning U.S. exporters.

The wild card continues to be China’s economic health, including its demand for agricultural goods, since the country took a very restrictive approach in the post-pandemic era. Beijing only recently eased its COVID-19 policy, though cases are currently on the rise, and it is uncertain whether the government will remain comfortable with a looser grip.

Karen Braun is a market analyst for Reuters. Views expressed above are her own.

Writing by Karen Braun Editing by Matthew Lewis

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

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As a columnist for Reuters, Karen focuses on all aspects of the global agriculture markets with a primary focus in grains and oilseeds. Karen comes from a strong science background and has a passion for data, statistics, and charts, and she uses them to add context to whatever hot topic is driving the markets. Karen holds degrees in meteorology and sometimes features that expertise in her columns. Follow her on Twitter @kannbwx for her market insights.