The USDA's May WASDE report brought the first numbers for the new crop worldwide. Although the US crop was the main highlight, as there could be several changes to the end of the cycle, some points can also be highlighted.
For China, the USDA expects a slight decrease in the 2022/23 harvested area, which should stand near 43 million hectares, resulting in a production drop from 272.6 million to 271 million tonnes, despite the slight yield increase. On the domestic consumption side, the Department expects an increase of 4 million tonnes from the 2021/22 crop to 295 million tonnes, mainly driven by feed use.
Despite the expectations of increased domestic demand and a slight decrease in production, the Department expects Chinese imports to continue trending lower to 18 million tonnes after the peak seen in 2020/21 when it reached 29.5 million tonnes.
For soybean, the USDA expects an increase of 500,000 hectares in harvested area, reaching 8.9 million in 2022/23, with production going from 16.4 million to 17.5 million tonnes. It is worth noting that the Department anticipates a recovery in domestic consumption and imports, at 115.6 million and 99 million tonnes, with better prospects for the country’s pork industry, which has been suffering from poor margins recently.
As previously mentioned, several adjustments may still occur in terms of supply and demand as the 2022/23 crop is currently being planted. However, data released by the Chinese Ministry of Agriculture, in its supply and demand report, shows a different scenario.
According to these data, the country's corn acreage decrease should be higher, totaling 42.5 million hectares, with producers planting more soybean, impacting the corn acreage, mainly in the northwest. Therefore, there is a priority to increase the soybean and other oilseeds' acreage. It is worth highlighting that China is dependent on soybean imports and an importer of vegetable oils. According to the USDA, between 2017/18 and 2021/22, Chinese domestic consumption exceeded local production by more than six times.
Soybean selected variables - China
Source: USDA and Chinese Ministry of Agriculture (CASDE). *million hectares. **million tonnes.
Accordingly, the soybean acreage is expected to increase by 18% from the previous year, reaching 9.93 million hectares in the 2022/23 cycle, with production increasing to 19.5 million tonnes, 2 million hectares higher than the estimated by the USDA.
The aim to produce more soybeans in China, even if domestic supply falls short of consumption, should lower imports. As a result, the Ministry expects Chinese imports at 95 million tonnes, 4 million tonnes lower than the USDA number for the 2022/23 cycle.
For corn, even with a sharper drop in acreage, the Chinese Ministry of Agriculture expects production at 276.6 million tonnes in 2022/23, slightly above the Department number and unchanged from the previous crop. In addition, corn imports by China are also expected at 18 million tonnes.
Corn selected variables - China
Source: USDA and Chinese Ministry of Agriculture (CASDE). *million hectares. **million tonnes.
