The main world importers and producers of soybeans, China and Brazil, are reducing their supplies for the second year in a row

Analysts are scrambling to forecast China’s soybean imports amid a record crop in Brazil, as a cut in purchases will knock prices down and rising imports will support them.

Over the past two years, China has reduced soybean imports, in particular in 2022 – by 5.6% to 91.08 million tons. At the same time, in 2022, soybean imports from Brazil decreased by 6.45% to 54.4 million tons (the share of of total imports was 60%, as in 2021), from the USA – by 8.5% to 29.5 million tons (32%), from Argentina – by 2.08% to 3.65 million tons, while deliveries from Uruguay doubled – from 866 to 1.79 million tons.

China’s reduction in imports is due to a severe drought in South America, logistical problems in the US and high soybean prices in the middle of the year, as well as an increase in its own production and the gradual substitution of soybeans by livestock farmers for other crops.

China’s Committee for Agricultural Forecasts (Casde) kept its FY 2022/23 soybean import forecast at 95.2 million tonnes, while USDA experts lowered their estimate to 98 to 96 million tonnes from 91.57 million tonnes in 2021/ 22 MR. At the same time, Casde raised its forecast for soybean production in China in 2022 from 19.48 to 20.29 million tons, and USDA – from 18.4 to 20.33 million tons, compared to 16.4 million tons in 2021.

A slowdown in China’s economic development due to the spread of Covid, as well as an increase in domestic production, reduced the volume of soybean imports in 2022, but analysts expect a recovery in demand in 2023 amid the lifting of quarantine restrictions and a revival of the economy, which was confirmed by a sharp increase in soybean imports in December.

In December, compared to November, China increased soybean imports by 43.7% to 10.56 million tons, in particular from the USA – by 78.03% to 6.02 million tons (0.77% less than in December 2021 ), from Brazil – by 1.1% to 2.56 million tons (by 21.2% more than in December 2021), from Argentina – by 26.5% to 1.46 million tons (by 331.6% more than in December 2021) thanks to the “soy dollar” policy, which made Argentine soybean prices more favorable than those of competitors.

Tags: China, Brazil, soybean, USA, Argentina, Uruguay