China’s appetite for soybeans remains strong, due largely to its rapidly expanding hog population. China’s hog herd continued to grow at a fast clip in September, and at the current pace is expected to return to pre-African swine fever (ASF) levels between the middle and the end of 2021, assuming no additional setbacks.
China’s hog population grew to 273.5 million head in September, up 4.6% from August, according to the Ministry of Agriculture. The sow herd increased by 2.3% to 26.8 million for the month, and is well above the September 2019 herd of 19.6 million head. A survey of major producers found an even faster growth rate for China’s hog herd of 5.2% in September from August.
China’s hog industry recovery is sustaining strong soybean imports and crush rates. In the 2019/20 marketing year, China crushed 91.8 million tonnes of soybeans, a 7.9% year-over-year increase and a record high volume even before the ASF epidemic.
Hog producer margins have declined due to high domestic feed costs, mainly rising corn and soymeal prices, coupled with lower pork prices. But margins still remain well above pre-ASF levels, and suggest continued growth in the sector.
China’s appetite for soybeans has drawn down both US and Brazilian supplies. All eyes currently rest on Brazil’s 2020/21 season, which has gotten off to a slow start because of La Niña-induced drought. Any declines in the country’s output will alter US farmers’ planting decisions for 2021, and the upcoming acreage battle between corn and soybeans in the United States could be hard fought.
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