December 24, 2022

 

China's soybean imports expected to rise in 2023, will benefit Brazil farmers

Victor Martins, senior risk manager at HedgePoint Global Markets, said China will end the year with historically low soymeal carryover stocks, which means it will increase its imports of soybeans next year, Nasdaq reported.

 

Martins said Brazilian soybeans are currently more appealing than American soybeans for February shipments to China. The soybeans are are processed in China to make livestock feed.

 

Some Brazilian farmers could begin harvesting their 2023 beans as soon as next week.

 

There are plenty of new-crop supplies from Brazil, whose share of global soy exports is expected to increase to 51.5% in the 2021/22 season.

 

Martins said China's soybean demand for 2023 is expected to increase due to a combination of higher supplies in Brazil, low soymeal stocks in China, and relaxation of COVID-zero policies.

 

Brazilian sales volumes to China may decline to their lowest level since 2017 this year, according to government trade data, but high prices meant that Brazilian sellers received sizable payments for the product going to China, even though there were fewer sales.

 

Brazilian government statistics showed Brazil exported 52.4 million tonnes of soybeans to China through November, earning US$31 billion. That contrasts with US$27.2 billion for the entire year 2018, when Brazil exported a record 68.5 million tonnes of soy to China alone.

 

Crop failures in the midst of a drought in the south of Brazil led to lower exports of soybeans, which increased domestic port premiums.

 

The decline had an impact on Chinese processors, who began 2022 with negative crushing margins as soy prices rose.

 

Low soymeal stocks and a sudden increase in Chinese hog margins occurred in the second half. Martins said this will increase China's demand for soymeal in the upcoming weeks.

 

-      Nasdaq