The December World Ag Supply and Demand Estimates showed that China will cut back on soybean imports. Mac Marshall, vice president of market intelligence for the United Soybean Board, says the slowdown isn’t a surprise.
“Margins for hog producers have been tough recently, continuing a trend that’s existed over the last couple of years. So, seeing that scale back in their expected importation of soy, I don’t think it’s surprising. It’s still a tremendous volume, and that’s more of what we should focus on. China is continuing to import those beans. We’ve certainly seen a lot of flash sales over the last couple of weeks. There’s an appetite in terms of Chinese demand for U.S. soy.”
Marshall says the market pays a lot of attention to South American details in the December WASDE.
“Brazilian crop down from 163 million metric tons to 161, still a little bit higher than what most of the trade was expecting, which is closer to 160. Of course, we have local commentators down there who are reconciling both dryness in Mato Grosso as well as a potential threat of soybean rust and some of the northern areas like Parana. Putting all that together, there’s an expectation that this crop may be coming in less than was initially expected, so it wouldn’t surprise me if we saw additional cuts and subsequent releases that closely aligned with what local market commentators are saying.”
There wasn’t a lot of notable information from the U.S. numbers.
“Turning to the U.S. side of the balance sheet, the crop has already made. We didn’t have any updates to any volumes on the balance sheet. The only notable thing was a four percent expected decline in the marketing year’s average expected price for soybean oil. Not too surprising, I think, given the slide that we’ve seen in RIN values over the last couple of weeks, Soybean oil is trading very closely to an energy, so you’re seeing a lot more influence from the crude oil and overall energy markets influencing soybean oil, so we’re seeing that down. That’s balanced somewhat by a $10 per ton increase in expected price for meal.”
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