US 2021 pork ending stocks to climb on weaker China demand
Pork ending stocks in the US by the end of 2021 calendar year is forecasted to rise by 18 million pounds (8,165 metric tons) year on year to 485 million pounds (220,000 tons) as exports shrink amid weaker demand from China.
The estimate for total exports from the US this year was cut by 30 million pounds (13,608 tons) to 7.16 billion pounds (3.25 million tons), down 117 million pounds (53,070 tons) from last year.
“The 2021 pork export forecast is reduced from last month largely on weaker import demand from China,” said USDA.
US pork exports next year are expected to fall further to 7.4 billion pounds (3.36 million tons), leading to an even higher ending stocks level at 500 million pounds (226,800 tons).
These estimates were expected by the market as pork price in China has plummeted this year, tightening both profit margins for pork producers domestically and for pork imports from overseas.
For more context, read our previous piece on hog futures in China.
Chinese imports to boost Aus. sorghum 21/22 exports
Australia’s sorghum imports in current marketing year are to rise marginally year on year thanks higher Chinese demand.
The country’s exports of coarse grain including corn, sorghum, barley, etc, are expected total 10.18 million tons, up 70,000 mt from the previous marketing year.
“Sorghum exports for 2021/22 are raised for Australia, with higher imports projected for China,” said USDA in the December Wasde report.
This latest projection contradicted the view last month which saw Australian coarse grain exports to fall 730,000 tons y/y to 9.38 million tons.
Lower China output dampens global 21/22 oilseed output, stocks
Lower soybean productions in China in 2021/22 marketing year pulled global supply of oilseeds including soybeans, rapeseed, and peanuts.
USDA pegged its estimate of Chinese soybean output in this marketing year in line with the projection from the Chinese statistics bureau.
“Global oilseed production is projected at 627.6 million tons, down 0.4 million tons from last month mainly driven by lower soybean production reported by China’s National Bureau of Statistics. China’s soybean production is down 2.6 million tons to 16.4 million on lower area,” USDA said.
With a lower domestic soybean output, China’s soybean crush volume is also expected to drop slightly, impacting international supply of soymeal.
Hence, Chinese soymeal output estimate is trimmed by 800,000 tons to 76.82 million tons, and soybean oil output in the country is also expected to dip 180,000 tons from previous estimation to 17.38 million tons in 2021/22.
“Global crush is reduced as lower soybean crush for China more than offsets higher sunflower seed crush for Russia and Ukraine”.
In spite of lower domestic output, Chinese soybean imports are forecasted to be consistent year on year.
Chinese soybean imports in 2021/22 are expected to remain at 100 million tons based on USDA projection.
However, ending stocks are to fall by more than 1 million tons to 34 million tons, push global ending stocks lower.
“Global oilseed ending stocks are projected at 114.1 million tons, down 1.1 million tons from last month mainly on lower soybean stocks for China,”, said USDA.
This previous piece by Sitonia Consulting offers more detail about China’s recent projections of domestic soybean, corn, and wheat output in 2021/22 marketing year.
China 21/22 grain imports stable, but uncertainty remains
China 2021/22 wheat imports were cut by 500,000 tons from previous projections to 9.5 million tons, according to USDA.
The department forecasted Chinese corn imports in 2021/22 to stay at 26 million tons, despite that China’s NBS expected the country’s corn output to jump by more than 2.5 million tons to 272.55 million tons.
Nevertheless, some expect Chinese corn imports to climb above 30 million tons this year due to looming supply deficit.
Our take on current corn market condition in China offers more insights.
China cuts 21/22 soyoil ouput estimate on more rapeseed oil production
Chinese government expected the country’s soybean oil output in 2021/22 marketing year to be lower than previously thought as rapeseed oil production rises on bigger planting area.
Soybean oil output in China will slide to 17.61 million tons in 2021/22, down 60,000 tons from previous expectations, according to the China Agricultural Supply and Demand Estimate (Casde). However, this is still higher than 17.14 million tons produced last year.
The main trigger of lower soybean oil output is higher rapeseed oil output which is expected to total 6.16 million tons, up 100,000 tons from last month’s projection.
Moreover, the latest projection means China’s rapeseed oil production will grow more than 9% on the year from 5.63 million tons in 2020/21.
“In 2021, China’s winter rapeseed planting area is expected to increase by 5 million mu (333,333 ha) compared with the previous year, and rapeseed oil production is adjusted to 6.16 million tons,” said Casde.
Gross imports of vegetable oil into China is consistent with previous estimates at 9.33 million tons in 2021/22, but down more than 13% from the previous marketing year.