Soybean crushers in southern China have begun to receive beans again from South America, easing a supply shortage in the world’s top market, crushers and analysts said.
Chinese buyers bring in soybeans to crush into soymeal for the livestock sector and cooking oil, but rains in top supplier Brazil in late February have delayed the harvest and exports, reducing soybeans and soymeal inventories in China to record lows and forcing some crushers to curb operations.
With weather conditions improving, however, shipments from the South American country are expected to land at China’s ports in large volumes over the coming weeks.
“Most (crushing) plants in Guangdong and Guangxi have restarted operations in the past few days,” said one crushing plant manager in the south of the country.
“Now crushers here are mainly executing contracts signed earlier and basis contracts. Physical supplies of meal are still tight, which is expected to ease next week.”
China’s national weekly soybean inventories , though still quite low, have picked up further from their record low point in late March and reached 3.67 million tonnes by April 13.
Weekly soybean stocks in Guangdong, a major crushing hub in southern China , climbed to 488,000 tonnes, almost double the levels at March 23.
“We have been selling lots of soymeal this week, as prices were expected to fall,” said a source with a leading crusher with plants in both northern and southern China.
“Some plants in the pearl river delta area, previously facing a shortage of beans, have reopened this week after cargoes arrived. You will see some easing (of the shortage) this week, starting from the south,” the source said.
Both the manager and the source declined to be named because they are not authorised to talk to the media.
However, crushers and analysts said the soymeal supply crunch will last a while longer because demand for the feed ingredient remains strong after a long shortage.
“Beans are arriving gradually. But there are a lot of soymeal (orders) that need to be delivered. Meal supplies will be tight for some time,” said Shanghai JC Intelligence analyst Monica Tu.
Brazil shipped 12.6 million tonnes of soybeans in March, up 35% year on year. At least 61% of these exports are destined for China, Refinitiv data shows.
Source: Reuters (By Hallie Gu and Gavin Maguire)