China is set to receive record imports of soy in the second quarter, traders and analysts said, after delays in Brazilian shipments and slow customs clearances caused supply shortages that forced several processors to halt operations.
The world’s largest buyer of soybeans is expected to import a record 31.3 million metric tons of the oilseed between April and June, helping to ease supply pressures caused by lower arrivals expected in March.
The estimate is based on the average of forecasts from five research and trading companies.
That total represents an increase of approximately 4.6% from the 29.91 million tonnes imported in the second quarter of last year. The growth comes as freshly harvested grains from Brazil’s record crop begin to arrive in China.
“Soybean prices in South America, especially new-crop Brazilian soybeans, are more attractive than their counterparts. This is because Chinese processors have bought quite large volumes of new-crop Brazilian soybeans,” said Cheang Kang Wei, assistant vice president at StoneX in Singapore.
The tighter supply in China is partly due to buyers’ decision to avoid U.S. beans, reflecting concerns about a potential trade war with Washington. In addition, delays in the harvest in Brazil, the world’s largest soybean producer, have also impacted import flows.
Beijing retaliated last week against new US tariffs by increasing duties on US$1.4 billion worth of agricultural products, including soybeans.
“The soybean shortage during this period was more widespread and severe, prompting a growing number of soybean mills across the country to halt operations,” said Liu Jinlu, an agricultural researcher at Guoyuan Futures.
March imports expected to fall
March imports are expected to fall to a five-year low of 5.27 million tonnes, according to StoneX.
Chinese companies are set to import a record 105 million tonnes of soybeans in 2024, driven by high crush rates to meet demand for livestock feed. In addition, there was a build-up in stocks ahead of the US president’s inauguration.
According to data from consultancy Mysteel, soybean stocks at Chinese ports shrank to 4 million tonnes as of March 7. That's down 600,700 tonnes from the previous week and down from 892,500 tonnes in the same period last year.
“Soymeal stocks are very tight, which is reflected in prices,” said an oilseeds trader in Singapore. However, he expects the situation to improve from April. “Prices of soybean products will come under pressure.”
Soybean crushing in March is forecast at 5.84 million tonnes, down 10.1% from February and 19.1% from a year earlier, StoneX's Cheang said.
Shortages and delays in clearance
The tight supply has consequently pushed crushing margins at the Rizhao processing hub to more than 450 yuan (US$$62.19) per tonne.
In addition, a slower pace of customs clearance at Chinese ports has exacerbated supply shortages.
In recent years, China has gradually increased the rate of quality inspections on imported soybean cargoes. As a result, clearance times have increased, which has ultimately delayed unloading, especially at a time when imports of the oilseed are booming.
For example, some shipments from the port to crushing plants can now take between 20 and 25 days, whereas previously it took about 15 days, a China-based trader said.
($1 = 7.2356 Chinese yuan renminbi)
Source: Ella Cao, Mei Mei Chu, Naveen Thukral and Christian Schmollinger | Notícias Agrícolas
