- The first seven weeks of the current US soya bean season “have seen the strongest exports ever.”
- By October 15, about 11.4 million tonnes had been exported by the US, an 85.3% jump from the first seven weeks last year
- The very strong exports beat all previous records and mark a return to business between the US and China’s soya bean importers
- Under the Phase One Agreement, China commits to boost its imports of US agricultural products from the US$18.6 billion import level in 2019.
Exports of US soya beans have reached a historic high following the return of Chinese buyers to the US market after years of disruption due to the US-China trade war, according to a new report.
The Baltic and International Maritime Council (BIMCO) in a new analysis said the first seven weeks of the 2020/2021 US soya season, which runs from September 1 this year to August 31 next year, “have seen the strongest exports ever.”
By October 15, about 11.4 million tonnes of soya beans had been exported by the US, an 85.3% jump from the first seven weeks in the previous marketing year, BIMCO said.
Average weekly exports so far this year stand at 1.6 million tonnes, or 22 Panamax loads (75,000 tonnes), almost double the weekly average of 880,692 tonnes (12 loads) last year.
“The very strong start to the US soya bean season beats all previous records and marks a return to business between the US and China’s soya bean importers, following years of disruption as China imposed tariffs on US soya beans in July 2018 due to the trade war,” said Peter Sand, BIMCO’s chief shipping analyst.
The return of Chinese buyers to the US market is the primary reason behind the strong start to the season. In the week ending October 15, the US exported 2.5 million tonnes of soya beans. Of this, 77.9% (or just under 2 million tonnes) went to China. Accumulated over the first seven weeks, exports to China amounted to 8.2 million tonnes, 71.9% of total US soya bean exports.
The Phase One Agreement between the US and China includes a commitment from the Chinese side to boost their imports of agricultural products from the US$18.6 billion import level in 2019.
The chances of this target being met are next to none, with exports from the US reaching only 28.8% of the target in the first eight months of the year. However, the boost in soya bean exports will provide much needed demand for dry bulk shipping, even though it will not be enough to fulfil the agreement.
“Compared to before the trade war, exports to China have risen by almost 30%, whereas exports to the rest of the world has been steady. In tonne mile terms, this brings a large boost to the shipping industry as the extra tonnes to China lead to a more than proportional increase in tonne mile demand,” said Sand.
After a slow start to the year in January and February, Chinese soya bean imports have performed strongly overall, with imports from Brazil also on the rise. Soya bean exports from Brazil to China have risen by 25.9% this year compared to the first three quarters of 2019.
Overall, total Chinese imports of soya beans have risen by 15.5% in the first nine months of this year, compared to the same period last year, amounting to 74.5 million tonnes, which is an increase of 10 million tonnes.
“As with other dry bulk commodities, China has become even more important in this pandemic year, as demand from China has grown compared to a fall in demand from the rest of the world. This is all the more puzzling for soya beans, which face lower demand in China as the pig herd remains smaller than it was before the large scale culling of millions of pigs to avoid the spread of the African Swine Flu. Though the pig herd is now growing, it remains considerably below the level seen several years ago, suppressing demand for soya beans,” Sand said.
“However, the strong imports now look set to continue throughout the rest of the year, given the strong start to the US export season, as well as the elevated outstanding sales which currently stand at 16.7 million tonnes, compared to just 4.6 million this time last year,” he added.