- Local soybean meal prices are hovering around three-year lows
- Heavy rains in South America could underpin soybean imports
China is sending record quantities of soybean meal abroad, as a shrinking number of pigs and weak demand for pork force processors to export their surplus animal feed.
The unusual sales are yet another sign of how China’s stuttering economy is curbing domestic consumption and upending trade flows. The nation dominates global agricultural markets as an importer, with a lot of activity centered around feeding its enormous hog herd and putting enough pork on the table for hundreds of millions of households.
To that end, China relies on vast amounts of soybeans from South America and the US, which are crushed into meal for livestock and oil for cooking. But cash-strapped shoppers aren’t spending like they used to, and farmers have reduced their herds because prices are too low.
That’s left local soymeal prices hovering around three-year lows. Exports, meanwhile, climbed to almost 600,000 tons in the first four months of 2024, which is nearly five times the level of the previous year. Destinations include nearby Japan but also far-flung countries like the UK.
Still, China’s emergence will only put a little dent in demand for soymeal from the top South American exporters. Both Argentina and Brazil shipped more than 20 million tons last year.
As such, whether Chinese exports can stay at current levels depends heavily on both soymeal prices and soybean supplies in those countries, as well as the impact of fewer pigs in China.
The nation’s soybean imports typically climb in the middle of the year. In addition, Chinese crushers will be looking at the affects of heavy rains on the South American crop, as well as rising tensions with the US, as reasons to keep purchases elevated and create a buffer in case supplies dwindle later in the year.
On the Wire
China has relaxed limits on new installations of solar and wind power even as grids have become strained in some regions from the surge in clean-energy deployments.
A bad April for the yuan has turned into a worse May, with its failure to rebound amid broad dollar weakness a warning sign that bearish sentiment risks snowballing.
Five major Australian beef producers banned from exporting meat to China will be allowed to resume trade immediately, Agriculture Minister Murray Watt said, the latest move by Beijing to normalize economic ties with Canberra.
China has blocked beef exports from a major JBS SA beef plant in the US after a controversial feed additive was found in meat shipments to the world’s largest buyer.
This Week’s Diary
(All times Beijing unless noted.)
Thursday, May 30:
- Nothing major scheduled
Friday, May 24:
- China’s official PMIs for May, 09:30
- China weekly iron ore port stockpiles
- Shanghai exchange weekly commodities inventory, ~15:30
Written by: Hallie Gu @Bloomberg
The post “China Turns to Exporting Livestock Feed on Weak Domestic Demand” first appeared on Bloomberg
 BullsNBears.com was founded to educate investors about the eight secular bear markets which have occurred in the US since 1802. The site publishes bear market investing recommendations, strategies and articles by its analysts and unaffiliated third-party and qualified expert contributors.
No Solicitation or Investment Advice:Â The material contained in this article or report is for informational purposes only and is not a solicitation for any action to be taken based upon such material. The material is not to be construed as an offer or a recommendation to buy or sell a security nor is it to be construed as investment advice. Additionally, the material accessible through this article or report does not constitute a representation that the investments or the investable markets described herein are suitable or appropriate for any person or entity.