Reuters – A flood of Brazilian soybeans into China is weighing on soymeal purchases and may curb buying of beans later in the year, traders and analysts said.
Soybean arrivals into the world’s top buyer have been running at record levels since the start of the year, after a record crop in Brazil pushed down prices of the animal feed protein.
Chinese customs data shows imports are up 11 per cent January to May compared to a year ago. That’s still set to rise as more than 11 million tonnes reaches ports this month, said two Beijing-based traders and commodities consultancy Zhouchuang.
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That is well above last year’s 8.25 million tons, though slightly lower than the record 12 million tonnes in May.
The surge will continue in July, with another 11 million tonnes, beating last year’s 7.88 million tonnes, and another 10.5 million tonnes in August, the two traders said.
Chinese buyers took advantage of bargain prices to stock up after smaller imports than usual in late 2022 and in anticipation of rising demand from farmers after China’s reopening from strict COVID-19 measures.
Demand has not increased, however, and soymeal demand is under pressure after months of losses for hog farmers that is set to extend into summer when hot weather curbs meat consumption, keeping hog prices low.
Animal feed makers are keeping soymeal stocks to a minimum as the poor hog margins drag on, said Rosa Wang, analyst at Shanghai JC Intelligence, reducing crushers’ forward sales and impacting their soybean purchases.
If demand is very weak, the feed producers could cancel soymeal contracts, Wang added.
