China Consuming World Soybean Supply?

Well this is an interesting twist.

Yanasa Ama Farms had some videos about 6? months ago saying that the FDA was blowing smoke about actual corn and soy production and that it was going to be lower than claimed (by a lot) and that it was going to be an issue.

Now, Ice Age Farmer is reporting that the data are in, and Soybean production is down and soybean stocks are down. China has bought so much of Brazil’s production (THE largest soybean producer in the world) that Brazil is now importing US Soybeans (despite being GMO). Well that’s not good.

We do know that China has had a lot of bad flooding in crop regions. We also know that there is a long history of Chinese Dynasties collapsing during cold excursions. So is it really any surprise that China is now running around the world buying up Soybeans like crazy?

The second topic he covers is a cyber attack risk to the food distribution system.

Don’t like tofu? Think Soybeans don’t matter to you? Well if you eat chicken and pork you care. They are basically corn and soybeans “repackaged”.

I need to do a bit more “Dig Here!” on this as Ice Age Farmer can be a bit, um, “breathless” and has been claiming “running out of food” for years. So is he just “way early” or is he hyping? Hard to say just now.

His discussion of “ID Cards to get food” sounds wacky until you realize they are in fact pushing a “Vaccination Passport” to fly anywhere…

Looking into the Soybean status:

It does look like Brazil is importing US Soybeans:

2020, a year when Brazil imported US soybeans
December 1, 2020 South American Update, Top Headlines Leave a comment

By Danielle Sequeira, AgRural

[…] Who could tell, above all things, that Brazil would be importing soybeans from the US?

Despite all the problems caused by the pandemic, including, unfortunately, 166 thousand people dead so far (0.079% of the Brazilian population, very close to the rate seen in the US), Brazil was able to export very quickly in the first half of 2020.

Spurred by the strong demand from China
and a weaker currency (a direct result of the risk aversion brought by the pandemic and of domestic problems caused by the political polarization that only got worse with the new virus), Brazil shipped 68.8 million metric tons of soybeans in the first six months of 2020, compared to 51.2 million in the same period last year (+34%).

Not a new record, but almost there

The export pace has slowed down now in the second half of the year, as expected. Nevertheless, by Oct 31 Brazil had shipped 81.4 million metric tons, 24% up from the same period in 2019. But the record seen in Jan-Dec 2018 (83.4 million metric tons) is not likely to be beaten, because Brazil has run out of soybeans and now is importing – first from Paraguay and Uruguay, neighbors and partners in the Mercosur trade bloc, now from the US, after the Brazilian government suspended an 8% import tariff until Jan 15, 2021.

So that checks out. Brazil is out of soybeans, and the USA production is off from projections. “China is sucking up the world supply” looks confirmed.

I’d guess China is not buying Australian Barley because they need to buy Soybeans to eat and can live without the beer (though some of us can’t ;-) It is my opinion that China is claiming a political motivation just because the truth would hurt and they can “make hay” out of the politics.

But what about the USA production?:

Oil Crops Outlook: November 2020

Disappointing Soybean Yields Stage a Recovery for 2020/21 Prices

Well that sure looks like putting lipstick on a pig. Yields are disappointing so you can’t grow much, but hey, prices will be up!

USDA’s Crop Production report in November reduces the 2020/21 yield forecast for soybeans to 50.7 bushels per acre from 51.9 bushels last month. With the estimate of U.S. harvested area unchanged, a lower yield pares back the 2020/21 soybean crop forecast this month by 98 million bushels to 4.17 billion. The soybean crop reduction is almost entirely responsible for slashing the season-ending stocks forecast by 100 million bushels to 190 million. This fall’s strong market rally is acknowledged with a hike in USDA’s 2020/21 forecast of the U.S. average farm price to $10.40 per bushel from $9.80 last month.

OK, 110 MILLION BUSHELS!!!! reduction sounds really really big… until you notice the 4.17 BILLION bushels production. Then prices rise about 60 ¢ out of $10, bad for chicken growers on contract, but not the end of the world.

The way I see it is that, yes, there’s a shortage. Not a huge one in the USA, but big in China. That, then, is rippling through Brazil into other South American providers, and finally landing at the door of the USA, with increased demand right when supply is off a little. 100,000,000/4,000,000,000 is 1/40th reduction. So supply side shock not really the issue in the USA. It’s a global demand pull problem in the face of fixed, slightly lower, supply.

Then consider that the Brazilian record exports to China were 83.4 Million tons. What’s that in bushels?

To facilitate the trading of grain, the USDA created weight standards for each grain so that grain could be weighed to determine the number of bushels rather than trying to make volume measurements. Corn was assigned a bushel weight of 56 pounds, while soybeans and wheat were assigned bushel weights of 60 pounds. Some other examples are: Rye at 56 pounds per bushel, barley at 48, oat and fescue at 32, etc.

So 2200 lbs/ 60 = 36 2/3

USA grew 4.17 Billion / 36.6666 = 113.7 million metric tons.

Peak year, 83.4 x 36 2/3 = 3058 million bushels exported by Brazil to China.

So Brazil is exporting to China about 73% of what the USA produces in total. That’s a lot of beans.

66,324 views|Oct 20, 2020,05:47pm EDT
The World’s Largest Soybean Exporter Wants To Import Soybeans. What Happened?
Sal Gilbertie

There are only four countries that really matter in the world of soybean exporters, Brazil, the United States, Argentina, and Paraguay.
Brazil exports almost 54% of all soybeans exported from those four countries, and they’ve basically run out of beans to sell.

Brazil is the world’s leading producer and exporter of soybeans, but rising domestic usage and record sales to China have drained supplies. The government has announced the suspension of import duties in an attempt to encourage imports and suppress rampant domestic food inflation.

Brazil has also imported soybeans from Argentina and Paraguay, IIRC.

So, to me, it looks like China has a huge food problem, Brazil got rooked into selling out all they had and are now scrambling as the China food problem is being reflected in local producers costs, and the USA has a LOT of soybeans, but most of them have already been sold and shipped leaving “not much” as a percentage in inventory.

OK “not our problem” in that we are doing fine growing soybeans. Not a huge collapse of soy production either, as Brazil exported a huge load. It’s mostly a China Food problem with a little bit of poor inventory management in Brazil and the USA.

Back from that Brazil link at the top:

New crop

And what about the 2020/21 soybean crop, which is being planted? Well, that is complicated. Spring rains, which are decisive for the beginning of the planting season in Brazil, where winter is extremely dry, have arrived later than normal and been very spotty. That caused a historical planting delay in several states.

Farmers have already caught up, planting at full steam from mid-October on, even where moisture wasn’t exactly good. The damage, however, is done. Not to yields so far, since planting later than normal is even beneficial sometimes. The problem is that the delay seen from mid-September to mid-October will result in fewer acres harvested in January, in a year that will have virtually zero beginning stocks.

That means that Brazil will not be able to export soybeans in January, leaving the US as the world’s main origin for a whole month more. Also, there are concerns about La Niña, which might result in yield losses down the road, especially in southern Brazil, since the phenomenon sometimes causes spells of hot, dry weather during the pod filling stage. But that is something to be addressed next month.

So, OK, January tight for Soybeans for export globally. USA pretty much the only player at the moment as the Southern Hemisphere folks are out of cycle with us. We’re down 1/40 th on production, but close to 1/2 of expected carryover inventory.

4000 million / 12 = 333 million bushels used per month, on gross average. We’ve got 190 million. Somebody will need to put more corn in their feed mix. (Or maybe, just maybe, import some of that loverly Australian Barley and put some rolled barley in the feed. Chickens, pigs, and even people love rolled barley. I get it at the local store and cook it like oats for breakfast…)

Do note that pigs and chickens are among the farm animals with the widest diet range possible. They both will eat just about anything. So ANY grain or ANY pulse / legume will do for either of them. Soy is usually cheapest so used most, but really any feed can be fed. So to really know if this will have a huge or small impact, we’d need to know what all the other feed grains are doing right now. But none of them have the total volume of corn and soybeans. OTOH, we’re not talking about replacing the BILLIONS of soy bushels, just 100 to 200 million. The EU regularly feeds excess rye to animals (the result of subsidy programs for rye…) as an example. I expect some head scratching and shopping around for feeds, but no crisis.

So yeah, OK, there IS a soybean shortage. Yeah, OK, it WILL get worse in January as the “usual” Brazilian harvest doesn’t come on line on schedule and we’ve not got enough stocks to carry through the month. But February it ought to all ease off again. IF world demand has exceeded global supply, this December Drought of soybeans will return each year. IF it is just a one year bad weather event in China, not so much.

I’m not seeing much reason to panic. I am thinking that if meat starts to show a price drop due to high feed costs leading to culling, well, fill the freezer with about 2 months worth and you ought to do fine. (Folks in China wanting MooShu Pork and tofu, not so much. )

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About E.M.Smith

A technical managerial sort interested in things from Stonehenge to computer science. My present "hot buttons' are the mythology of Climate Change and ancient metrology; but things change...
This entry was posted in AGW and Weather News Events, Economics - Trading - and Money, Emergency Preparation and Risks, Food, Political Current Events. Bookmark the permalink.

10 Responses to China Consuming World Soybean Supply?

  1. V.P. Elect Smith says:

    Looks like the hoopla over corn is about the ESTIMATES being way too high, not production dropping.

    2020/2021 U.S. PRODUCTION
    The USDA pegged the average U.S. corn yield at 178.5 bushels per acre vs. the trade’s expectation of 178 bushels per acre and the USDA’s August estimate of 181.8 bu./acre.

    The U.S. total corn production is seen at 14.9 billion bushels vs. the trade’s expectation of 14.8 billion and the USDA’s August estimate of 15.27 billion bushels.

    If realized, it would be the second-largest U.S. crop ever produced. Also, the USDA/NASS agency made a note in the report that due to the resurvery of Iowa’s derecho storm-affected crops, it dropped the state’s corn acreage estimate by 550,000 and left soybean acreage unchanged.

    I have trouble accepting that the second highest ever is somehow a great reduction…

    Also note that the .1 Billion bu, or 100 Million bu, excess of production over trade expectation is a nice way to fill 1/2 of the January feed shortfall in soybeans of about 140 million bu.

    Oh, and note too that if a feed blender bought, say, 250 million bu of soybeans and already blended it up into finished feeds, it would not show in the soybean carryover inventory, but would still be there to feed animals.

    Depending on how the whole feed blending food chain has seen this coming and adapted, there could well be little impact on end feed status.

  2. Compu Gator says:

    E.M. Smith posted on 6 December 2020 at (no time shown) GMT:
    Don’t like tofu?  Think Soybeans don’t matter to you?

    As late in life as I’ve survived thus far, I’d rather not be consuming estrogen-mimic chemicals, thank you very much.

    E.M. Smith posted on 6 December 2020 at (no time shown) GMT:
    Well if you eat chicken and pork you care.  They are basically corn and soybeans “repackaged”.

    Oh.  Never mind.

  3. billinoz says:

    Chinese increased demand for soybeans reflects the rebuilding of the Chinese pig breeding sector after millions of pigs were put down due to African Swine Virus in 2018-19. I think there will e a fall on Chinese demand for imported pork in the coming year.

    Also a lot of Argentina’s crop is trans-shipped to Brazil and sold off there as ‘Brazilian’.
    Why ? Well the Argentine government taxes exports – so much per ton and demands that the foreign revenue proceeds of crops exported by repatriated to Argentina. But growers are paid in pesos at a fixed rate far below the market rate. ( Official rate 46 pesos to the US dollar. Free market is now around 145 pesos to the dollar. Ummm ? ) Some also goes out via Paraguay but the bureaucratic corruption there is far higher.

  4. V.P. Elect Smith says:

    @David A:

    I don’t “do” panic well at all…

    Like all things ZeroHedge, it hypes. “270 million marching toward” but not there yet, but real soon now, honest!!!!

    Yes, there’s food distribution and equity problems. Yes it will be worse. But a UN Organization shilling for more money for what they do is about as reliable as asking a bank robber who took the money…

    Total food production is still about as high as ever. Any great starvation will be due to distribution and mal-governance issues. i.e. people in power.

    I do think we’ll see a lot of hungry poor people. I’m certain tossing money at the UN is not going to fix it.

  5. Nancy & John Hultquist says:

    I see these reports of gloom and wonder (a) if the writers have ever driven across the U. S. (crisscrossed); and (b) have they ever actually been on a farm and talked to the decision makers?

    1862, the Morrill Land Grant College Act was passed – – fill in a whole bunch here – – and in 1928 the Future Farmers of America was founded; the FFA is a pre-college hands-on and educational program.
    Point is, American farmers are an educated bunch. They have to be a step or two ahead of the writers. They are optimists, and fast responders.

    Maybe it was out of context, but Michael Bloomberg said, “You dig a hole, you put a seed in, you put dirt on top, add water, up comes the corn.”.

    Can you imagine the roar of laughter heard across the farm belt?

  6. cdquarles says:

    Yes. Stupid city slicker ;p, er, stupid *yankee* city slicker around here :).

  7. President Elect H.R. says:

    @Nancy & John Hultquist re Land Grant universities:

    I received my Engineering degree from one of those land grant universities.

    There are a whole bunch of them across the Mid-West and elsewhere and they were primarily Ag & Mech. schools. All of them have strong Engineering and Agriculture programs to this day. Oh, they usually also have good veterinarian programs.

    Engineers and better farmers were what this growing country needed back in the late 1800s.

    You are right about all of the knowledge a modern farmer must have to run a prosperous, high yielding farm. Dummies just don’t last long in the farming biz. For the remaining family farms, usually the most interested and apt kid or kids get sent to Ag school so they can continue the operation.

    The land grants schools were one of the cheapest and best investments in America at that time and they are still needed today.

  8. V.P. Elect Smith says:

    @Nancy & John Hultquist:

    It was NOT out of context. I saw the whole thing real time. He was going out of his way to say you could teach anyone to farm, that farming was a big nothing of a challenge brain-wise, and then gave that quote.

    I just could not believe that level of ignorance.

    Then again, I went to an Ag College. Cal Aggies. 3000 acre campus with farms, farm animals, winery, veterinary medical college, the whole 9 yards+.

    I took ONE Ag class as a short monitor basis (was pondering Ag Economics vs Economics as Ag Econ had more real business focus vs Econ being all theory). I sat in on / audited a Soils Science class. In about 2 weeks I realized I was in way over my head. (This after plenty of chemistry, physics, and biology). These folks were integrating all that in a very complex and variable environment. What complexes might confound ion tests for various fertilizers. How physical chemistry in soils was different from that in a test tube. How chemical applications interact with soil biome and why that matters to your crop. Physical geology of soils and how to manage it to your benefit. (Gravels lower, sands, then on top the live soil layer).

    So, OK, the first couple of weeks is the “survey the whole turf, don’t explain it” stage, but I could see clearly what was coming and knew I wasn’t ready for it. (prerequisites I’d skipped no doubt)

    And I’d grown up in farm country with a Dad who grew up on a farm, taught me to run a mini-farm in our garden out back, and had a few head of cattle on a rented ranch outside of town. (My first lesson in corn genetics was from my Dad when, as a wee lad, I’d planted a couple of Indian Corn plants among his sweet corn… and learned that the F1 kernels reflect both parent genetics not just the sweet corn parent…)

    I wasn’t laughing at Bloomberg, but more aghast. I also knew that at that moment he lost any support from anywhere Ag was done.

    I’d met a lot of Ag Majors at UCD. They were often the smartest guys in the dorm. Typically from a farming family with a few $Million of farm about to become their responsibility. Focused, hard working, and motivated. The biggest idiots were in the Humanities. Women working on a MRS degree. Guys who could not DO anything themselves. Took a movie making class, a lot of fun, but packed with incompetent flakes who mostly emoted about crap.

  9. The Quiet Farmer says:

    Here in QLD, Australia we have wheat and barley back $20-30/metric ton and new crop red sorghum (milo) ie just planted, outperforming wheat by $30/ton.
    Looks like Chinese ensuring sorghum for their liquor ( bidou???) is a high priority.
    Food not so much.

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