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Soybean and pork imports jump as US and China heighten trade

China's soybean imports in the first two months of 2020 jumped 14.2 percent year-on-year, official data showed on Saturday (7 March), as cargoes from the United States booked during a trade truce at the end of 2019 cleared customs.

9 March 2020, at 10:15am

China, the world's top market for soybeans, brought in 13.51 million tonnes of the oilseed in January and February, up from 11.83 million tonnes a year earlier, according to data from the General Administration of Customs released on Saturday.

Customs said last month it would combine preliminary trade data for January and February instead of releasing data for individual months. Early-year data in China is typically distorted by the week-long Lunar New Year holiday, while this year the coronavirus epidemic has also widely disrupted business.

China brought in 9.54 million tonnes of the oilseed in December, when cargoes from both Brazil and the United States cleared customs.

Soybean crushers purchased more US beans after Beijing issued extra tariff-free quotas for some American cargoes ahead of an initial trade deal that was finalised in January.

China has already granted tariff exemptions to some crushers to import US soybeans, Reuters reported on Friday.

Measures to contain the coronavirus in China, however, hampered operating rates at crushing plants by disrupting the transport of raw materials and processed products.

Crushing rates are expected to start gradually picking up as the virus containment measures ease amid falling rates of infection within China.

US soybeans usually dominate the market in the fourth quarter and the early months of each year, when exports from the US autumn harvest kick in.

A tit-for-tat trade war that began in mid-2018 greatly curtailed US soybean shipments to China over the past 1-1/2 years, although buying emerged periodically.

China has promised to buy more US farm goods under the trade deal that Beijing and Washington signed in mid-January, but it has so far fallen short of making large purchases of agricultural produce, including soybeans.

US Agriculture Secretary Sonny Perdue on Wednesday predicted China will come to the US market for soybeans in late spring and summer.

China's demand for soybeans has also been curbed over the past several months by African swine fever which has slashed the country's pig herd by almost 50 percent.

US pork market

Meat processors slaughtered an estimated 609,000 cattle this week, up from 602,000 cattle a week ago and 584,000 cattle a year earlier, according to US Department of Agriculture data. They killed 2.47 million hogs, up slightly from last week and from 2.36 million a year ago.

In the pork market, the most-active April lean hogs contract settled up 0.550 cent at 65.925 cents per pound and reached its highest since 21 February.

Traders continue to hope for increased buying by China, the world's largest pork consumer, as it grapples with ASF.

"They are completely waiting on a China buying story," says Rich Nelson, chief strategist for commodity broker Allendale in Illinois.

Leading German meat processor Toennies reported increased sales, with the company benefiting from rising demand from Asia, especially China.

Estimated margins for US meat processors rose to $116.25 per head for cattle from $112.95 on Thursday and $55.30 a week ago, according to livestock marketing advisory service HedgersEdge.com. Margins for pork packers increased to $24.65 per head for hogs from $23.25 on Thursday and $20.90 last week.