June 26, 2023

 

Brazilian soybean shipments to China puts pressure on soymeal demand

 

 

 

Traders and analysts said that the influx of Brazilian soybean cargoes into China is having a negative impact on soymeal purchases, which could potentially limit bean buying later in the year, Yahoo! Finance reported.

 

China, the world's largest buyer of soybeans, has been witnessing record levels of soybean arrivals since the beginning of the year, driven by a bumper crop in Brazil that led to a decline in prices of this essential animal feed protein.

 

According to Chinese customs data, soybean imports have increased by 11% from January to May compared to the previous year, and the numbers are expected to rise even further as more than 11 million metric tonnes of soybeans are set to reach ports this month, as reported by two traders based in Beijing and commodities consultancy Zhouchuang.

 

Although slightly lower than May's record-breaking 12 million tonnes, it still surpasses last year's figure of 8.25 million tonnes.

 

This surge in soybean imports is projected to continue in the following months. The traders said that another 11 million tonnes are expected to arrive in July, surpassing last year's 7.88 million tonnes, followed by an additional 10.5 million tonnes in August.

 

Chinese buyers have capitalised on the favourable prices to build up their soybean stocks after experiencing lower-than-usual imports in late 2022 and in anticipation of increased demand from farmers following the easing of COVID-19 restrictions in China. But the anticipated surge in demand has not materialised, and as a result, the demand for soymeal is under pressure.

 

Swine farmers have faced months of losses, which are expected to continue into the summer due to reduced meat consumption during hot weather, leading to persistently low hog prices.

 

Rosa Wang, an analyst at Shanghai JC Intelligence Co Ltd (JCI), said that animal feed makers are maintaining minimal stocks of soymeal as the poor swine margins persist. This has resulted in reduced forward sales for crushers and has impacted their soybean purchases.

 

Wang said that in normal years, swine farmers and feed companies carry three weeks to a month's worth of stocks, but this year, it is only one or two weeks, because they don't have promising expectations for the future.

 

Wang also said that if demand remains weak, feed producers may even consider cancelling soymeal contracts.

 

Darin Friedrichs, co-founder of Shanghai-based Sitonia Consulting, expressed scepticism about the prospects of import growth in the second half of the year.

 

-      Yahoo! Finance

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