Soybean Flat amid Concerns over New African Swine Fever Variants in China

Soybean futures are trading relatively flat on Tuesday as investors are monitoring the emergence of new variants of the African Swine Fever (ASF) virus in China. After decimating Beijing’s herd supplies in 2018 and 2019, hog inventories are only now recovering. But it might be short-lived based on the resurgence of the disease. Where does this leave soybean prices?

May soybean futures edged up by $0.0125, or 0.09%, to $14.1875 per bushel at 13:12 GMT on Tuesday on the Chicago Board of Trade (CBoT). Soybean prices have flatlined over the last week, although they are still up more than 8% year-to-date.

Industry observers are combing through a new report from Rabobank, titled “African Swine Fever: A Global Update — Ongoing Change in Global Pork Markets in 2021.” Despite complications of the country’s pork supply and demand situation, the current sow herd is as much as 15% higher than the same time a year ago. Researchers also project that pork output will increase between 8% and 10% year-over-year in 2021.

Analysts have been concerned because the sow herd tumbled 3% to 5% from December 2020 to February 2021. Experts are optimistic that this could be good news for meat exporters since the world’s largest pork market would require outside sources to feed the population.

We have recently adjusted our estimate down, due to the headwinds created by the new wave of ASF outbreaks. We believe pork production will continue to grow, as the sow herd has expanded on a year-on-year basis, despite the losses during the winter.

At the same time, we see all exporting countries looking to maintain trade with China. Price will be one major factor that determines which countries will maintain high pork trade flows to China in 2021, along with availability and geopolitical considerations.

Could this hinder its soybean purchases? New data from the General Administration of Customs found that China’s soybean imports from Brazil plunged 80% in the first two months of 2021 from the same time a year ago to 1.03 million tons. But shipments from the US to China nearly doubled to 11.9 million tons.

Moreover, the European Union’s soybean meal imports declined 4.6% year-over-year to 12.3 million metric tons during the July 1 to March 21 period. Raw soybean purchases climbed 3% to 10.5 million metric tons.

Argentina and Brazil supplies have tightened considerably this year. Brazilian soybean farmers conceded that they have minimal crop inventories to sell, while Argentine farmers are apprehensive about growing their agricultural commodities because of the government’s tax policies.

In other agricultural markets, May corn futures edged up by $0.005, or 0.09%, to $5.495 per pound. May wheat futures shed $0.045, or 0.72%, to $6.2275 a bushel. May coffee futures dropped $0.0125, or 0.96%, to $1.2885 per pound.

If you have any questions and comments on commodities today, use the form below to reply.

© AndrewMoran for Commodity News, 2021. | Permalink | No comment |
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