While USDA forecast a larger-than-expected soybean harvest expected for the United States in its September supply and demand report, China chose the same day to suggest that their soybean imports may fall some 10% for the 2018/19 crop year to 83.5 million metric tons, well below the current USDA estimate of 94 mmt that was revised 1 mmt lower this month.
As seen on the attached chart, China has increased imports every year since 2003/04. In May, USDA estimated 2018/19 imports to reach 103 mmt. This was lowered to 95 mmt in July, and a further 1 mmt cut in September brings expected imports to 94 mmt, which would be unchanged from 2017/18.
Earlier in the week, the USDA attache report on China reported a three-pronged approach undertaken by China to reduce their dependency on soybean meal, which includes 1) promoting lower-protein feeds; 2) utilizing competing oilseed meals, such as canola meal; and 3) increasing domestic production.
Implications for Canadian traders could be growing. Projections for a potential record crop in the U.S. will force U.S. exports into new markets and bound to cross paths with Canadian traders. Recent DTN commentary points to a situation where losses in exports to China in July were recouped by movement into new markets. This was a concern expressed some time ago by Canadian industry groups but could become more prevalent as the size of the U.S. crop grows and global demand shrinks.
On the other hand, the timing of the announcement by China's Ag Ministry this week may be deemed suspicious and could be an idle threat ahead of what may be a fresh round of trade negotiations between the U.S. and China. U.S. export data released Thursday suggests that a combination of sales and shipments as of the first six days of the crop year are on par with the year-ago pace. A social media post indicates that China imported 9.15 mmt of soybeans in August, a record for the month and 8% higher than August 2017. Trimming demand may be easier said than done.
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Cliff Jamieson can be reached at firstname.lastname@example.org
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