China likely to remain unaffected by Brazilian soybean harvest delay

New Delhi — China has ample stocks of soybeans to crush in coming weeks and will likely be unaffected by a delay in the Brazilian harvest, market sources said Feb. 24.

According to Beijing-based agricultural consultancy CCOBN, China's soybean stocks were estimated at 5.78 million mt as of Feb. 19, up 8% year on year.

Indeed, global soybean prices were expected to come under pressure in coming days as China had sufficient volumes, analysts said.

The world's largest soybeans purchaser's inventory was boosted by its spree buying US-origin beans between December and February.

China had pre-booked large volume of US soybeans for delivery between December and February, which made up for any possible supply gap caused by the Brazilian harvest delay, a large China-based crusher said.

In addition, China's soybean imports in the first quarter were expected to be higher than last year, which should quell any speculation of a supply crunch.

Soybeans imports by China in Q1 were projected at 19.6 million mt, compared with 17.8 million mt in Q1 2020, a China-based grain and oilseeds analytic agency said. For February and March, China's soy imports are projected at 6.6 million mt and 5.5 million mt, compared with last year's imports of 5.5 million mt and 4.3 million mt, respectively, it said.

As a result, China's crushing industry, the world's largest, was expected to remain unfazed by the tight supply situation in South America.

"China's crushing sector is pretty much covered till March, as far as soybean supply is concerned," a Shanghai-based private crusher said.

Brazil harvest delay

Brazil -– the world's largest soybean producer and exporter and China's primary soybean supplier –- is facing a harvest delay, which has hit the pace of exports since January.

The country shipped out a seven-year low 49,000 mt in January, a foreign trade department report said. Soybean export volumes totaled 1.25 million mt in the first three weeks of February, compared with 3.55 million mt in the same period last year, trade data showed.

The pace of Brazilian soybean harvest was seen at the slowest in a decade on late planting and heavy rains in January.

According to national agricultural agency Conab as of Feb. 19, the country's soybean harvest was at 15.5% of the projected acreage for 2020-21 marketing year (February 2021 to January 2022), compared with 33% last year.

As a result, shipping line-ups have shown a substantial fall in port activity.

The latest shipping line-up in Brazilian ports showed 42 Panamax vessels loaded for China, as of Feb. 23, which amounts to 2.76 million mt, a Brazil-based shipping agency said. Last year, 86 Panamax vessels were loaded with 5.77 million mt of soybeans for China by end of February, it said.

Going forward, China is unlikely to turn to the US-origin soybeans in coming weeks, even if the Brazilian harvest and exports delay persists into March.

Nearby month shipment from US PNW offered CFR China $2.35/bushel over CBOT March, which is 70 cents/bushel ($25/mt) higher than Brazilian soybeans, according to S&P Global Platts assessments.

According to S&P Global Platts Analytics, China was expected to import an all-time high 100 million mt of soybeans in the 2020-21 marketing year (October 2020 to September 2021) as the country's swine herd is likely to fully recover from the African swine fever epidemic by June.