Home > Futures channel >                 text

"African Hog" hits US soybean exports Experts suggest that US farmers cut production a lot

May 15, 2019 08:36
source: First finance

Oriental Fortune APP

  • Convenient
  • Mobile phone viewing financial news
  • Professional, rich
  • Master the pulse of the market

Read articles on your phone

  • prompt:
  • WeChat sweep
  • Share it with you
  • Circle of friends
["African Hog" hits US soybean exports Experts suggest that US farmers cut production a lot] US farmers have to reduce soybean acreage this year. The African swine fever epidemic has dealt a major blow to soybean exports, and many South American countries outside the United States have excess soybean production. (First Finance)

K map zs00y_0

The US soybean farmers have some unfavorable years this year: After the global trade situation is unclear, and the floods in March caused the granaries to be washed away, the “African Hog” that swept the world also hit the pig feed – soybean exports.

The Food and Agriculture Organization of the United Nations (FAO) pointed out in the latest April Global Food Price Index and the latest issue of Food Outlook that due to the problem of African swine fever, global demand for pork imports has soared and prices have risen sharply, and as a feed for pigs. The demand for cereals and oilseeds, especially soybeans, has shrunk.

At the same time, cereal prices, including soybeans, are also under downward pressure due to sufficient production and stocks.

Arlan Suderman, chief commodity economist at INTL FCStone Financial Services, said in an interview with CBN: "In the Western Hemisphere, there is a surplus of soybeans in the whole. Outside the US. There are also many South American countries, such as Argentina, Brazil and other countries, where there is overproduction of soybeans."

He pointed out that in order to comply with the market trend, American farmers need to reduce the planting area of ​​soybeans.

How long is the impact of “African Hog” on soybean exports? From the side of the "African swine fever" vaccine, Sudman told the First Financial Reporter that it will take many years for R&D, and it will take 2-3 years for the vaccine to be developed.

  Soybeans falling below the cost price

FAO pointed out that global cereal prices will face downward pressure in April due to sufficient production and stocks. World cereal production is expected to reach a record 2.722 billion tons this year, up 2.7% from last year, while global food import bills may fall by 2.5. %, down to 1.47 trillion US dollars.

At the same time, due to the decline in pig stocks caused by the African swine fever epidemic, the production and sale of pork processing and pig feed will also shrink.

INTL FCStone pointed out in a report that Chinese consumers' preference for pork makes it the world's largest pork consumer market with a 49% market share. Soybeans are the main source of protein for pigs, and China is also the world's largest importer of soybeans. Therefore, the stagnation of the Chinese pork industry will reshape the global trade in meat and grain feed.

According to the US Grains Association, if China cuts 40% of pork, it will reduce the demand for feed grain by 81.6 million tons.

Zhou Shizhen, a senior researcher at the China-US Relations Research Center of Tsinghua University, worked in the Chinese Embassy in the United States and handled agricultural trade affairs for a long time. He told the First Financial reporter that China's soybean imports last year were 88 million tons, down from 112 million tons in the previous year, a reduction of 30 million tons, basically reducing the number of US (soy).

Zhou Shizhen pointed out that China consumes 60% of the world's soybeans. Imported soybeans are mainly for feeding, not for the extraction of soybean oil. What China really eats is rapeseed oil.

As of May 13, the Chicago Board of Trade's main soybean futures once fell below the $8 mark, the final price of 8.04 US dollars per bushel, a new low in 11 years, and has fallen below the cost of planting. Soybean prices have plummeted by 25% since they reached their peak in October last year.

Sudman explained to the First Financial reporter that the United States now has a large surplus in soybean production, which in itself drives the market to encourage soybean production, that is, use low prices to restore the balance of soybean supply (regulation). But so far, they have not done so. The US Department of Agriculture's March planting report shows that there are still a large number of soybean crops.

Zhou Shizhen told the First Financial News reporter that he learned from relevant parties that in the case of a decrease in US soybean imports, the Chinese side has adopted the method of adding oysters and green storage corn as feed to pigs, pigs also love to eat, two plants. The protein is very high.

  Soybean decline is difficult

Considering the current “African swine fever” epidemic, this may promote China’s imports of pork and other alternatives.

On April 17, Tang Wei, Director of the Department of Market and Information Technology of the Ministry of Agriculture and Rural Affairs, said that according to preliminary estimates by experts, pork prices in the second half of the year may increase by more than 70%, which is expected to reach a record high, and the profitability of pigs will continue to improve.

According to data from the Ministry of Agriculture and Rural Affairs, pork imports reached 207,000 tons in January-February this year, an increase of 10.1% over the same period last year. Industry experts predict that imported pork will increase in the future due to the impact of the African swine fever epidemic.

According to US Department of Agriculture data, in March this year, China traded nearly 27,000 tons of pork. This purchase madeChicago Mercantile ExchangeUS pork futures soared nearly 43%. Subsequently, China purchased 77,730 metric tons of pork in early April.

The French ambassador to China, Li Xiang, also confirmed in an interview with the First Financial News that in the future, French pork is also expected to increase exports to China, and poultry products are also expected to be lifted.

“At present, there is no African swine fever in France.” Li Xiang said in an interview with the First Financial News that “France and China are both big producers of pork. The experts in the Chinese industry also understand the quality of French products.”

However, in the future, the total export volume of French pork to China, Li Xiang admitted to the First Financial Reporter that it is currently impossible to determine (how big is the amount), and wait until the market first opens before looking at the specific situation.

Li Xiang provided the first financial reporter with the nodes of Sino-French future consultations in this regard, including the May 11-12 period, the Chinese and French agriculture ministers will attend the G20 Agriculture Ministers Meeting and meet during the period, followed by France. The Minister of Agriculture will also go to Shanghai to participate in relevant food exhibitions.

“When pork supply is reduced, poultry can be one of the main meat choices to replace pork.” Sudman believes.

At the same time, if overseas pork production capacity increases, will this alleviate the slow sales of North American, especially US soybeans?

Sudman told the First Financial Reporter that the increase in meat production in other regions will restore the consumption of feed crops to the current level, but this will take time.

“For example, the annual increase in pork production capacity in the United States is at most 4.5%. This growth is limited by many factors, pig farm infrastructure, pig slaughterhouse capacity, so for other countries, similar time is needed. He explained, and at the same time, the United States still produces excess soybeans every year, so we should reduce the amount of soybeans planted and return supply and demand to balance.

He pointed out that economists are worried that the American farmers as a whole did not seriously consider the possibility that the soybean market will face a serious decline.

As pointed out in the aforementioned INTL FCStone report, the US Department of Agriculture released a 2019 spring planting willingness survey showing that only a certain degree of seed transfer has been carried out outside the feed crop.

  "African swine fever" vaccine is hopeless in the short term

According to the INTL FCStone report, it seems that science is not able to save the epidemic soon. There is currently no vaccine against African swine fever.

In fact, in the United States, the spread of African swine fever has brought together the fiercely competitive, rivals of the top 50 pigs and pork processing companies to jointly fight the outbreak of swine fever. Last October, the US Department of Agriculture awarded the world's largest animal health medicine and vaccine company -Shuo TengThe company (Zoetis Inc.) is licensed to develop African swine fever vaccine. Although these measures are very positive, the development of vaccines takes many years and is a consensus among researchers in the industry.

Sudman admitted to the reporter that the current African swine fever is also a risk for North American pig farmers, unless the vaccine can be introduced as soon as possible, and "people in this industry told me that it is estimated that it will take at least 2-3 years. The vaccine can be developed. The current vaccine development is still in the early stages."

The US Department of Agriculture pointed out that even if there is a case of African swine fever in the United States, it may weaken the gains and cause a huge blow to the industry that employs 500,000 workers and is worth $20 billion.

US Department of Agriculture and Customs and Border Protection officials have stepped up supervision and expanded the prosecution team by 50% at major ports and airports. They also use sniffer dogs to detect signs of outbreaks in live pigs, frozen pork and other pork products, and to check for tourists from East Asia and Eastern Europe who find African swine fever.

However, this does not completely prevent the invasion of the plague. It seems that every week there are new countries with African swine fever, and in early April Japan and Cambodia discovered the epidemic.

“The US pork industry is no longer talking about whether or not there will be swine fever, but it is discussing when it will happen.” Sudman said: “They all hope that the vaccine can be developed before the epidemic spreads to the United States.”

(Article source: First Finance)

                (Editor: DF318)

you might be interested
  • News
  • stock
  • global
  • Hong Kong stocks
  • US stocks
  • futures
  • Foreign exchange
  • life
    click to see more
    No more recommendations
    • name
    • Code
    • Latest price
    • Quote change
    Please download Oriental Fortune products to view real-time quotes and more data.
    Solemnly declare:Oriental Fortune.com publishes this information in order to disseminate more information and has nothing to do with the position of this website. Oriental Fortune Network does not guarantee the accuracy, authenticity, completeness, validity, timeliness, originality, etc. of all or part of this information (including but not limited to text, data and graphics). The relevant information has not been confirmed by this website, and does not constitute any investment advice for you. According to this operation, the risk is at your own risk.