February 26, 2021
Soybean crushers in China to lower output due to harvest delays in Brazil
Soybean crushers in China are expected to massively lower output in the coming months because of harvest delays in Brazil, resulting in surging prices and a possible rundown in inventories, Reuters reported.
Analysts, crushers, and traders told Reuters that the shortage will last until mid-April the minimum.
A manager with a major soy crusher in southern China said Brazilian soybean shipments to southern China will be very limited next month.
The manager said they had planned to suspend operations for a couple of days, but now that will be extended to two weeks due to the delayed cargo. He did not want to be identified as he was not permitted to speak to the media.
A drought delayed Brazil soybean planting late last year, plus constant rains this year have disrupted harvest. In early 2020, soybean crushers in China were also forced to wind back operations, with inventories dropped to record lows and soaring soymeal prices.
Xie Huilan, an analyst with consultancy Cofeed, said soybean inventories will see a major drop in March while soymeal prices will be on the rise, adding that some soybean crushers have already planned to suspend operations for a month.
She said however, it will not be as bad as last year as feed and livestock producers have learnt their lesson, with ample soymeal stocks prepared in advance.
China's rapid swine herd recovery have also resulted in higher soybean imports compared to the previous year, but new African swine fever outbreaks have weakened overall demand.
A senior trader at a company in China, which runs crushing plants across the country, said about 5.5 million tonnes of soybeans are projected to arrive in March. That would be higher than the 4.28 million tonnes for March 2020 but lower than the average monthly soybean consumption of 8-9 million tonnes.
The CFD-SBMST-NATN, China's national weekly soybean meal stocks, were at 758,800 tonnes as of February 23. This was more than double the levels compared to the previous year. The CFD-SBSTK-NATN soybean inventories were at 5.73 million tonnes, the same with levels last year.
Soymeal futures in China increased 6% in February to RMB 3,587 (~US$555; RMB 1 = US$0.15) per tonne, while domestic soybean prices have surged 8%, near to record high levels last seen in July 2008.