Several Brazilian analysts have increased the country’s soybean production outlook recently, including the country’s main soybean crusher ABIOVE. ABIOVE is projecting a Brazilian soybean crop of 168.7 million metric tons this year. This is a 9.5 percent increase from last year’s crop. The firm is projecting a big jump in soybean exports, going from last year’s 98.3 mmt last year to 104.4 mmt this year. The group is also predicting soybean crush of 57 mmt this year, up from last year’s 54.5 mmt. The ABIOVE production figure is in line with other projections, but their demand is higher, mainly for exports.

One of the most highly debated market topics right now is how much export competition will be seen from Brazil next year. There is a wide range in soybean export forecasts for Brazil, ranging from 98 mmt up to the aforementioned 104 mmt. Brazil has expanded its soybean crush capacity recently to satisfy an ever-growing biodiesel demand, same as in the rest of the world. Analysts in Brazil are projecting a 7 percent increase in biodiesel production this year, demand that will compete with the export market for available soybeans. This competition is already supporting the global oilseed market and will only add strength as demand from both sides grows.

Livestock contracts have started to show a division in long-range demand outlooks. This is the result of Chinese import data that is confirming a shift in red meat demand. Year-to-date Chinese beef imports total 2.3 mmt, a record high volume. At the same time China has imported 35 percent less pork than a year ago as diets in the country continue to evolve. Given the fact that China has traditionally been a large source of U.S. pork export demand, this is troubling for hog complex balance sheets.

Adding to these concerns is the possibility of an over-supply of Chinese pork following its Lunar New Year celebration if demand does not pick up soon. Current pork demand in China is 60-70 percent less than a year ago. Prices have little to do with this poor demand as retail values have traded lower over the past two months and are nearly equal to a year ago. Some analysts feel the warmer weather in China has limited demand as consumers tend to eat more pork in colder weather. The fact that China is struggling with a deflationary market and seeing poor consumer spending on all products is more of a factor in low pork consumption.

China’s Minister of Ag has released its 2024/25 corn and soybean import forecasts. For corn, China is expected to import 13 million metric tons in this marketing year, well below the 2023/24 import total of 23.4 mmt. For soybeans, the ag minister is forecasting imports of just 94.6 mmt. This compares to the 107.74 mmt of imports for the last marketing year. Chinese officials believe elevated domestic production and more efficient usage will reduce the need for imports.

China’s leading ag importer COFCO is also lowering the country’s soybean needs but is slightly higher than the ag minister’s projection. COFCO has China’s 24/25 soybean imports at 98.8 mmt. The big question is where these soybeans will originate, with sources claiming 20 and 25 mmt will come from the United States.

Economic data out of China has given hope to a struggling import market. According to data from Sitonia Consulting, China’s retail sales in October were up 4.8 percent from the prior month, beating expectations. Restaurant spending was up 3.2 percent in October and overall food spending was up 10.1 percent. China also saw a 39 percent increase in appliance sales in the month, and 27 percent more was spent on entertainment. These signs indicate the country may finally be correcting from its recent state of deflation which has weighed heavily upon commodity demand.

An interesting shift is taking place in Russia that is impacting the world grain flow. Russian farmers have been selling a higher-than-normal volume of grain recently. Typically, we see little grain selling from Russia at this stage of the year. Russia is fighting a hard battle against inflation, with the country’s interest rate hitting its highest point in 20 years. Russian banks are also paying a high interest rate on short term deposits, with some reaching 25 percent. This has caused farmers in Russia to convert inventory to cash, keeping a constant supply of cheap grain flowing into the world market.

Russian authorities have given the world market mixed grain production estimates recently, and this is being credited to conflicting acreage totals. The Russian ag minister has stated that that group’s production data includes acreage from “new territories” that were previously controlled by Ukraine. In its latest balance sheet updates, the USDA put the Russian wheat crop at 81 mmt this year, 10 mmt less than last year’s crop. Russian firms claim the crop could be as large as 85 mmt from this added area, even with less-than-ideal growing conditions. This has some firms questioning overall Black Sea production forecasts.

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