Hit by Brazil shipment delays, Chinese soybean crushers forced to shrink output
RIO DE JANEIRO, BRAZIL – Chinese soybean crushers are expected to curtail operations sharply in the coming months due to harvest delays in top exporter Brazil, pushing up prices and likely leading to a rundown in inventories.
The shortage will be widely felt and probably last till at least mid-April, analysts, crushers and traders told Reuters.
“Bean shipments from Brazil to southern China will be very limited in March. Supplies will be tight,” said a manager with a major crusher in southern China.
“We originally planned to suspend operations for a couple of days but now we will have to extend that to two weeks as our cargo got delayed,” said the manager, who was not authorised to speak to media and declined to be identified.
Drought delayed soybean planting in Brazil in late 2020 and constant rains have disrupted harvest this year. That’s similar to what happened early last year when Chinese crushers had to wind back operations, inventories fell to record lows and soymeal prices rallied.
“Soybean inventories will fall significantly in March…soymeal prices will also rise,” said Xie Huilan, an analyst with consultancy Cofeed, adding that some plants had already made plans to suspend operations for a month.
“But it probably won’t be as bad as last year.” she said.
She said feed and livestock producers learned lessons from last year and have built up ample soymeal stocks in advance. A rapid recovery in pig production after African swine fever outbreaks also led to higher soybean imports than the previous year, while new outbreaks have weakened overall demand.
Detailed forecasts about the extent of the production cuts and their impact on inventories and prices were not immediately available.
Some 5.5 million tonnes of soybeans are expected to arrive in China in March, said a senior trader at a company which runs crushing plants across the country.
That would be up from 4.28 million tonnes for March last year but still well below the average monthly soybean consumption of 8-9 million tonnes.
China’s national weekly soybean meal stocks CFD-SBMST-NATN were at 758,800 tonnes as of Feb. 23, more than double the levels in the previous year. Soybean inventories CFD-SBSTK-NATN were at 5.73 million tonnes, on par with levels last year.
China’s soymeal futures prices have risen 6% this month to 3,587 yuan ($555) per tonne, while domestic soybean prices have rallied 8%, near record high levels that were logged in July 2008.
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