May 16, 2012

China's soy demand keeps increasing

The record early season sales, even though not indicative of future exports, shows emphasis on China's growing demand for soy imports and their need to secure enough stocks.

This can be seen in trends over the past five years where China's import demand has grown by 50% (20 million tonnes) while early season purchases of new crop beans through April have risen from near zero to the current 7.1 million tonnes.

Given the expanding import demand by China, this trend toward greater forward purchasing constitutes a significant change in buying patterns.

Given the recent crop losses in South America and tight supply situation, US exports are currently forecast at record for 2012/13.

Global soy production in 2011/12 is lower due to reduced South American crops. Global trade is higher on stronger imports by China. World import demand for soymeal and oil is marginally lower. US exports are up and the season average farm price is raised to a record.

For 2012/13, prevailing strong prices are expected to lead to a record global soy production. Import demand is forecast to rise driven by China, Vietnam, Taiwan, and Indonesia.

Trade for soymeal is forecast to expand, while decline for soyoil. US soy production and exports are forecast higher. US season average farm price is projected at a new record.