In June, China imported 10,5 million tons of soybeans from Brazil. Never before has so much Brazilian product been purchased in a month. This is at the expense of US exports, which should be significantly higher, because of ...
In total, China bought 11,16 million tons of soybeans last month, according to data from Chinese customs. The lion's share (almost 95%) comes from Brazil. Imports from Brazil in June were no less than 91% higher than the same month last year. There is also a significant increase compared to May, when imports amounted to 8,8 million tons. China's hunger for soybeans is linked to the growing pig herd as it recovers from deforestation caused by African swine fever. Soya is an important raw material in the ration.
American exports hit hard
The US, in turn, is seeing a sharp decline in exports to Asian major users. In June, the country shipped 267.000 tons to China, more than half less than in 2019. Exports were also considerably lower than in May, when almost 500.000 tons were sold in China. These volumes are in stark contrast to the volumes that the US sold in China before the trade war. At the time, the Americans were by far the largest supplier, but that position was usurped by Brazil.
Initially, China planned to significantly increase imports of American soybeans this year, when phase 1 of the trade agreement was signed in January. Yet the declining American export figures do not come out of the blue. In early June, the Chinese government handed over its state-owned enterprises the assignment not to import American soybeans and pork for the time being. This is due to renewed diplomatic tensions between the two superpowers, which are still not resolved by mid-July.
Brazil expects record harvest
The trade dispute is not the only reason why China prefers soy from South America. Because the coronavirus has hit Brazil hard, the currency has fallen significantly in value. Against the dollar, the Real fell by more than 20%. This benefits Brazilian soy exports. The currency devaluation pushed the price of soybeans to a record high of more than 2.000 reals per tonne this spring, making soybeans a lucrative crop for Brazilian growers. However, in dollar terms, Brazil remained competitive on the global market.
The Brazilian soybean harvest is heading for a new record of 2020 million tons this growing season (2021/129), an increase of 3,5% compared to last year. The expected record harvest is due to a planned area expansion of 3,8% to 38.4 million hectares. This estimate deserves some serious comment, given that the season only starts in September. So there is not yet a seed in the ground of the alleged record harvest.