This month, USDA raised 2022/23 (Oct-Sep) China soybean imports to a new record of 100.0 million tons. Imports are expected to remain high in the last quarter of the year as the world’s top buyer sources competitively-priced soybeans from South America as well as clears the customs backlog of cargoes that have already arrived.
Through 10 months of the current marketing year, China has already imported nearly 84.5 million tons of soybeans, with almost 30.0 million sourced from the United States. Total arrivals to date are 10 percent higher compared to the same period last year, with the United States capturing about 40 percent of that growth.
Shipments from the United States trailed off in April as Chinese buyers took advantage of a bumper Brazilian soybean crop and attractive prices. Smaller suppliers of soybeans to China have also increased their exports. The “soy dollar” program in Argentina contributed to the recovery in shipments in the first half of 2022/23. Canada and Russia also increased exports to China this year on higher soybean production and relatively flat crush.
In 2023/24, China is projected to remain the world’s largest soybean buyer with imports forecast at 99.0 million tons. China is likely to continue buying larger volumes of soybeans from Brazil and potentially less from the United States. Prices of the new U.S. crop have been rising on lower supply expectations, while Brazil's output prospects remain robust.
Indonesia Palm Oil Industrial Usage Up on Biodiesel Exports
Indonesia started its B35 biodiesel blending program in February 2023 with full implementation potentially as soon as this month. Since 2020, Indonesia has increased its biorefining capacity by nearly 50 percent anticipating higher domestic consumption needs. Biodiesel production not used domestically can be shipped internationally if market conditions are favorable. Through May, Indonesia has quadrupled biodiesel exports compared to the same period last year, with China accounting for the lion’s share of the import demand. Based on higher biodiesel exports, Indonesia's industrial domestic consumption is up 200,000 tons to 11.7 million tons. Due to a data revision, Indonesia's palm oil exports increased by over 400,000 tons in 2020/21. This impacted ending stocks with the change carried forward to the 2023/24 marketing year.
PROJECTION FOR 2023/24
Global 2023/24 oilseed production is forecast down 3.6 million tons to 663.7 million as reduced U.S. soybeans, Canada rapeseed, and EU sunflowerseed were not offset by higher Russia and Ukraine sunflowerseed, and Belarus rapeseed. Oilseed exports are down on lower U.S. soybeans and Canada and Uruguay rapeseed. Correspondingly, rapeseed imports are lower in China and Mexico, and soybean imports are lower in Pakistan, Egypt, and Bangladesh. Global vegetable oil trade is up on increased Belarus rapeseed oil and Ukraine sunflowerseed oil exports. Global meal exports are up on increased Ukraine sunflowerseed meal and U.S. soybean meal. Global oilseed stocks are down on lower U.S. soybeans, Canada rapeseed, and EU sunflowerseed carryout exceeding higher Ukraine sunflowerseed carryout. The projected U.S. season-average farm price for soybeans is up 30 cents to $12.70 per bushel.
PROJECTION FOR 2022/23
Global 2022/23 oilseed production is forecast at 629.1 million tons, down 400,000 from July with lower Uruguay soybeans and China sunflowerseed partially offset by higher Belarus rapeseed and Paraguay soybeans. Oilseed exports are down 1.0 million tons on lower Canada rapeseed and Uruguay soybeans. China soybean imports are up 1.0 million tons with lower Bangladesh and Egypt soybean imports offsetting. Global oilseed crush is down 1.0 million tons as lower China sunflowerseed coupled with lower Bangladesh and Egypt soybean crush is only partially offset by higher China soybean crush. Global vegetable oil trade is up on gains in Argentina soybean oil and Belarus rapeseed oil exports. Global meal trade is up slightly on higher soybean meal exports from the United States. Global oilseed stocks are up 700,000 tons on higher Canada rapeseed and Argentina soybean carryout. The projected U.S. season-average farm price for soybeans is unchanged at $14.20 per bushel.
Although fundamentals were mixed, prices for the global soybean complex finished higher on average in July compared to the previous month. U.S. soybean prices were trending higher in July following lower soybean crop expectations after the June 30, 2023, NASS Acreage report coupled with strong demand for crush. However, towards the end of the month, prices began to decline on reports of improving weather conditions in the Midwestern United States, with the most active Chicago soybean futures contract losing most of its monthly positive gains by the beginning of August. Although U.S. soybeans remained the most expensive offers, the price premium against South American soybeans narrowed in July. Argentina soybeans began trading lower than Brazil's origin for the first time since 2022 at the start of August as Brazil soybeans gained strength on seasonality and high disappearance. Soybean oil continued to drive more of the soybean crush value in July, as prices of other vegetable oils like palm remained supported by strong demand. Economic challenges in countries like Egypt, Bangladesh, and Pakistan have muted global meal demand, keeping prices relatively restrained. The premium for U.S. soybean oil compared to other exporters jumped dramatically this month to more than $600/ton, driven by domestic biofuel demand, a reduction in forecast U.S. soybean production, and rising rapeseed oil prices caused by drought in Canada.