China’s ‘extraordinary demand’ has buoyed soybean market – Delta Farm Press (2013)

The U.S. is on track to have a very tight soybean carryout this year, due almost entirely to the “extraordinary demand from China,” says David Glidewell, Mid-South regional manager for ADM… “Nobody in the farming business can afford to ignore China, or how important it is to the world and U.S. ag economies” … While China is “the world’s largest producer of corn, soybeans, wheat, rice, cotton, pigs, ducks, chickens, and on and on,” he says, “they consume the vast majority of that production. To date, the only ‘crop’ they have not been self-sufficient in is protein,” and that lack was a boon for U.S. soybean producers in 2012.


A key reason… is the shortfall in the South American soybean crop the previous year, “which gave us the sandbox pretty much to ourselves” for several months. “The demand pace has been such that, as we go into early spring, we’re going to see stocks levels that we would probably not normally experience.“Soybean stocks are going to be very tight in the U.S. this year… The world soybean stocks-to-use ratio is “a little more comfortable than the U.S.,” Glidewell says. “While the Midwest drought trimmed the U.S. soybean crop in 2012, there was not near as much yield destruction as in corn. With rains in late August and cool temperatures, soybeans proved once again they’re a pretty resilient crop, and yields were not much under 40 bushels per acre… 


“The world soybean stocks-to-use ratio got tight because of the big shortfall in South America. The U.S. has had its stocks drawn down in making up that shortfall and supporting the tremendous demand in China.” The U.S. stocks-to-use ratio for soybeans is even tighter than for corn, Glidewell says, “and some would suggest the stocks numbers are overstated. Most would say, though, that at some point we’ll wind up around 135 million bushels of carryover — which is not panic mode, but is tight.


“That means some areas of the U.S. will be really tight and will have to import soybeans from other parts of the country to run crushing plants, or some crushing plants might have to idled. The really tight stocks-to-use ratio that’s being projected is a direct result of the huge demand, and the bigger market share the U.S. saw this past year as a result of the South American shortfall.” Chinese consumers’ demand for a diet more meat/protein-based has caused their demand for corn “to explode” … 

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