China’s pig herd rebuild to support soy crush for ‘several years’: ADM

Global soybean crush margins are expected to be supported over the next couple of years as China continues to rebuild its pig...

Global soybean crush margins are expected to be supported over the next couple of years as China continues to rebuild its pig herd and professionalises its livestock sector, with the industry drawing from an ever-increasing demand for protein, Archer Daniels Midland’s (ADM) CEO said Friday.

The trader has crushed a record volume of soybeans so far this year, supported by surging demand for soymeal by China, while its US export margins widened on the back of Chinese demand for US soybeans and corn.

China’s economy has roared back from the effects of the Covid-19 pandemic that struck it earlier this year and is rebuilding its pig herd at the same time after it was hit by an African swine fever (ASF) outbreak in 2018-2019.

“We think there are probably a couple of years ahead of us for China to recover the herd completely as I think they are going to build their self-sufficiency. So, we’re going to see continued strength in crush margins and we feel that this will be driving demand,” Juan Ricardo Luciano said during an investor call Friday.

Luciano added that while there is a “big effort” in China to rebuild the pig herd, it is professionalising the animal husbandry sector at the same time, which is further increasing the demand for soybean meal and corn.

“That’s why you see so much pull from China for imported corn,” he said.

The demand for the pork sector has been supplemented by China’s poultry sector, which surged during the ASF outbreak and has continued to expand even with the pig herd expanding again.

“We certainly see 2021 with a lot of optimism, conditions are there for us to have good times. And we don’t see at this point in time that this will change. Demand is strong,” Luciano said.

He added that demand from key importers has outstripped previous years following the pandemic as “governments are more concerned about food security now”.

Finally, ADM’s CFO Ray Young said that China has started looking at potential imports of US ethanol, with one vessel having already sailed.

“They are making a lot of enquiries about US ethanol,” Young said.

What to read next
This is a sample of Fastmarkets’ weekly recap of the main movements in global cash markets.
Despite the current headwinds, strategic partnerships and continued investment in the right areas, coupled with the underlying strong long-term demand fundamentals, will pave the way for success for lithium producers, according to the participants of the executive panel during the Fastmarkets Lithium Supply and Battery Raw Materials Conference, which took place from June 23-26 in Las Vegas, Nevada.
The US and Europe must adopt long-term, consistent policies and should learn lessons from China, according to lithium industry experts speaking at Fastmarkets’ Lithium Supply and Battery Raw Materials Conference in Las Vegas, US, over June 22-25.
This consultation was done as an adhoc methodology review process, aiming to better reflect the physical market under indexation, considering its reduced liquidity linked to the combination of seasonal demand patterns and the implementation of cross-border import tariffs between the US and China. No feedback was received during the consultation period and therefore Fastmarkets will […]
Full details of the prices covered by this consultation can be found here: https://www.fastmarkets.com/insights/open-consultation-on-annual-methodology-review-for-global-pulp-pricing-notice/ During the consultation, Fastmarkets requested comments on whether current discount levels for US market pulp have grown too high and invited open-ended feedback on potential remedies moving forward. Feedback from the industry was mixed. Potential remedies suggested by the industry included […]
Fastmarkets has corrected the rationale for its MB-CO-0021 cobalt hydroxide payable indicator, min 30% Co, cif China, % payable of Fastmarkets’ standard-grade cobalt price (low-end), which was published incorrectly on Wednesday July 2 due to a reporter error.