What to Make of a Drop in Chinese Soy Demand

November 16, 2021
Justin Friesz, senior merchandiser at CHS, relays the latest USDA numbers on soybean exports to China and explains how the Brazilian crop could impact export markets.

Many U.S. commodity markets revolve around our export business with China. Here’s a snapshot of the current situation with Chinese demand for U.S. soybeans.

The USDA recently released its monthly World Agricultural Supply and Demand Estimates (WASDE) report, which revised Chinese demand for U.S. soybeans from 101 million tons to 100 million tons, says Justin Friesz, senior merchandiser with CHS.

“You don’t want to see demand going lower,” says Friesz. “However, this presents some great opportunities for the U.S. The projection is still 1 million tons higher than year-on-year and we see China being very active in U.S. exports. About 60% of all our committed soybean exports are to China, so we still have a healthy export flow to that country.”

Crop being planted in Brazil

The South American growing season is off to a good start due to adequate moisture, leading to a projected boost in global soybean supplies.

“We are coming off a record soybean crop in Brazil of 138 million tons one year ago, which shortened the window for U.S. export opportunities,” says Friesz. “Currently, Brazil’s soybean crop is about 75% planted, which is about 20% ahead of pace year-on-year and about 10% higher versus a three-year average.

“With no major threats, the USDA is projecting a 144 million ton crop this season — a record crop followed by another record crop,” Friesz continues. “What that’s done for the U.S. balance sheet is the USDA removed about 40 million bushels from the U.S. export program in this latest report. Globally, this is making for a comfortable situation unless something changes.”

Opportunities for U.S. farmers

Despite the soybean export drop, Friesz still sees good news for U.S. farmers. “Take advantage of opportunities the market gives you and your operation,” he advises. “The U.S. still has a robust domestic crushing program. Farmers should benefit from this while watching how the weather in Brazil changes throughout the season.”