Home Agribusiness Appetite for soybeans reaches new high

Appetite for soybeans reaches new high

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Cheap supplies fuelling voracious consumption to make soy-based animal feed and cooking oil, especially across Asia.

The world can’t seem to get its fill of soybeans.

Exports from the U.S. and Brazil, the world’s largest growers, are the highest ever for this time of year, and demand is poised to eclipse earlier government forecasts for a record this season. While big harvests have left inventories at all-time highs, prices have started rebounding from last month’s one-year low. That’s because cheap supplies are fuelling voracious consumption to make soy-based animal feed and cooking oil, especially across Asia.

“Demand is just silly good,” said Dale Durchholz, senior market analyst at Bloomington, Ill.-based AgriVisor LLC. “The world economy is improving, and as incomes rise, consumers demand more meat, dairy and eggs. Traders have underestimated demand while focusing on the big supply.”

China, the biggest buyer, boosted first-quarter soybean imports by 20 per cent from a year earlier, and the pace is twice what it was as recently as 2010, government data show. The country maintains the world’s largest pig herd and it is using more soy-based feed after the government imposed restrictions on imports of a corn-based alternative.

“China does not want to get caught without soybeans,” said Pedro Dejneka, a partner at Chicago-based MD Commodities, which also has offices in Brazil. Dejneka says China’s imports may reach 91 million metric tons in the year ending Sept. 30, topping an estimate last month by the U.S. Department of Agriculture (USDA) for a record 88 million, he said. That’s up from 83.2 million a year earlier.

Exports by the U.S., the top grower, are running at the strongest pace in two decades, at a time of the year when shipments are usually slower. Soybeans inspected for export rose to 521,218 tons in the week ended April 27, up 62 per cent from a year earlier and the most for that period since 1997, government data show.

Since Sept. 1, at the start of the harvest, shipments are 15 per cent above last year’s record pace, signalling the USDA’s full-season forecast of 55.1 million tons may be too low. But that isn’t just because of China. There have been more purchases from Indonesia, Thailand, Pakistan, South Korea, Bangladesh, Taiwan, Malaysia, Vietnam, Egypt, the Netherlands and even neighbours Canada and Mexico, data show.

Brazil is expected to be the largest shipper this year. In the first four months of 2017, exports rose to 27.7 million tons, 17 per cent more than a year earlier, according to Anec, an exporters group. China accounted for 21.6 million of the total, up 18 per cent.

“World demand for soybeans was surprising in the past months,” and expectations for the year are being revised because “Chinese imports remain very strong,” said Vinicius Ito, an analyst at Ecom Trading in New York.