Surplus of soybeans in China, caused by active imports from Brazil, lowers domestic prices for meal and oil

China, which is the world’s largest importer of soybeans, continues to increase its purchases, which has already led to a surplus in the domestic market and a drop in prices for soybean meal and oil. Therefore, in the coming months, soybean imports may decline significantly, which will negatively affect exports from the United States.

According to the General Administration of Customs (GACC), in June, China increased in comparison with May soybean imports from Brazil by 2.2% to 9.72 million tons, which exceeds 9.51 million tons imported in June 2023. For 6 months of 2024, China imported from Brazil 34.4 million tons of soybeans, which is 16.1% higher than the corresponding figure in 2023 and is a record value for this period. Brazil is ahead of the United States in soybean supplies to China, providing 70% of oilseed imports.

The surplus of soybeans may reduce imports in September-December, the period of the most active soybean exports to the US.

the Surplus of soybeans in China is increasing due to record imports and low demand for animal feed. On the stock exchange in Dalian, prices for soybean flour fell by 8% in 3 weeks, and for soybean oil – by 4% per week, and, according to analysts, will continue to fall.

From soybeans, China produces high-protein soybean flour, which is used to feed the world’s largest pig population, while soybean oil is used for cooking. However, the slowdown in the country’s economic development, which consumes half of the world’s pork production, is reducing demand for meat and feed.

Significant supplies of soybeans amid low demand for processed foods reduce the margin of its processing. In early June, it was already negative, and within a month it fell to minus 600 yuan/t, which is the largest decline since February.

According to Reuters, the state-owned soybean supplier Sinograin has auctioned about 9.68 mln tonnes of soybeans since February, but processors bought only 21% or 2.08 mln tonnes. Last year, 27% of soybeans were sold at the auction, and the participation rate was also higher.

Traders believe that in July, soybean imports, primarily from Brazil, will reach a record level amid low prices and the prospects of victory of D. trump in the presidential election, which will resume trade disputes.

At the same time, the Ministry of agriculture of China predicts a reduction in soybean consumption in 2024/25 MG compared to the previous season from 115.24 to 114.56 million tons.

Tags: China, Brazil, prices, soybean