Wandile Sihlobo, Agbiz

There are interesting developments in the Chinese animal feed industry. Recent reports from the International Grains Council suggest that the country has expanded the use of low protein animal feed formulas. This could potentially reduce the soya bean imports by 5 million tons in the 2018/2019 season. Moreover, China’s imports of canola and sunflower meal are expected to increase this season and potentially substitute 6 million tons of soya bean meal.

This comes on the back of the United States-China trade dispute which led to the introduction of tariffs on soya bean imports. Earlier this year, China’s 2018/2019 soya bean imports were expected to reach a record level of 103 million tons. A number of agencies and analysts have revised their forecasts down since the introduction of tariffs. Yesterday, China National Grain and Oils Information Centre placed its 2018/2019 import estimate at 94 million tons, which is 9% lower than the estimates presented earlier in the year and a percentage point lower than the previous season. This will be offset by the aforementioned alternative protein sources.

Elsewhere, the unfavourable weather conditions experienced in parts of the United States (US) Midwest in the past couple of weeks have negatively affected the crop. In the week ending 03 August 2018, about 67% of the US soya bean crop was rated good or excellent, down by 3 percentage points from the previous week’s (ending 27 July 2018) rating. There is, however, progress in terms of growth, with 92% of the crop already blooming, which is a 6-percentage points improvement from the previous week.

On the domestic front, the focus today will be on the producer deliveries data for the week ending 03 August 2018 which is due for release at midday (8 August 2018). The producer deliveries for the week ending 27 July 2018 amounted to 2 426 tons. This placed South Africa’s 2017/2018 soya bean deliveries at 1,5 million tons, which equates to 95% of the expected harvest of 1,6 million tons. – Wandile Sihlobo, Agbiz

Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, shares highlights in his update on agricultural commodity markets. Click here for the full report on agri markets for the major commodities.

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