The USDA has cut its estimates for Chinese soybean imports for MY 21/22 by 2 MMT to 90 MMT. Chinese soybean imports so far in MY 21/22 (October-September) have totaled 65.4 MMT, down 8.8% YoY. Of this, 36.9 MMT came from Brazil, an 11.2% YoY increase, and 26.1 MMT from the US, a decrease of 28.9% YoY. Weak, lockdown-induced restaurant demand for hogs has reduced livestock margins and resulted in farmers searching for cheaper feed substitutes to soybeans. Additionally, Chinese authorities have been releasing soybean stockpiles to try and lower prices.

Consumption is expected to recover in MY 22/23, with the USDA forecasting a 3.2% increase in soybean crush to 95 MMT while also forecasting a 4.2% YoY increase in imports to 98 MMT. This is likely factoring in the removal of China’s zero-Covid policy and restaurants staying open going forward, though it appears this policy remains firmly in place.

In future, higher domestic production could soften any sharp recovery in imports given the lifting of all lockdowns. The USDA forecast Chinese production will increase by 12.2% in the 2022/23 marketing year to 18.4 MMT, with planted areas up 11% YoY. Chinese authorities have been encouraging farming through subsidies and by promoting intercropping of soybean and corn. In major producing provinces in the Northeast, soybean sowing for 2022/23 was completed on schedule in May and June and met or exceeded targets in most areas., according to industry and official sources reported by the USDA.

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Indian thermal coal imports increased by 45.1% YoY in June, totaling 20 MMT. Liftings from Indonesia increased by 165.4% YoY to 14.7 MMT, while from Australia volumes totaled 2.2 MMT, falling by 20% YoY. Indonesia’s proximity, cheaper prices, and increased availability due to lower Chinese demand, have all contributed to the surge in trade on this route.

This rise in coal demand was driven by a 26.58% YoY increase in coal power generation in June and stockpiling by power stations amid a global energy shortage. India experienced widespread power outages in April and May when the easing of Covid-19 lockdowns and a severe heatwave led to a surge in power demand. Power usage has now subsided as the monsoon rains bring respite from the heat. But with a resurgence in demand anticipated once the rains ease off in August, power stations are pushing to replenish inventories. The Indian government has been trying to support these efforts, pushing power stations to increase imports, and allowing mines to expand production by up to 50% without requiring new permits.

The heavy rains can cause severe safety issues at mines, allowing for the seaborne market to play a larger role in the country’s stockpiling. According to data from the Central Electricity Authority, coal stocks at 172 reporting plants totaled just 27.5 MMT on 10 July, 49% of target inventory levels. Meanwhile, 42.4% of plants continue to operate at critical stock levels, defined as being 25% below their targets, suggesting these imports levels may be sustained in the months to come.