China ramps up imports of cheaper Brazilian soybeans in July

New Delhi — China's July soybean imports mostly consisted of cheaper Brazilian beans purchased in previous months, when the South American beans were selling at an average discount of 10 cents a bushel to their US counterparts, market sources said.

China imported 8.2 million mt of Brazilian soybeans in July, up 28% year on year and accounting for over 82% of the total, while the US soybeans accounted for just 0.4% on 38,331 mt, significantly lower than July 2019's 900,000 mt, Chinese customs data showed Aug. 25.

The Brazilian real has lost 40% of its value against the dollar in the last 12 months, making Brazilian soybeans extremely competitive on international markets, market sources said. The Chinese crushers cashed in on this opportunity and bought large amount of Brazilian beans between February and June, as a weak real supported farmer selling.

Brazil exported 70 million mt of soybeans between January and July, with 73% of them destined for China, a Brazilian trade department report said on Aug. 2.

With robust feed demand from its livestock sector, China -- the world's largest soybean buyer -- imported 10 million mt in July, up 16% year on year, customs data showed.

China has ramped up soy purchases, pre-empting potential uncertainty arising from the coronavirus pandemic and US-China tensions, in addition to rising animal feed demand in domestic pork industry, a market source said.

Chinese crushers are also not willing to take supply-side risks in the coming months.

For October, its soy import coverage is estimated to be almost complete, a Chinese analyst said. In fact, Chinese buyers are now mostly focused on booking November and December shipments.

In August, Brazil is expected to dominate China's total soybean imports as the cheaper South American cargoes booked in previous months clear the country's customs department.

However, starting September, the share of US soybeans in China's imports should rise dramatically as the US harvest begins, market sources said.

With limited Brazilian soybean stocks until January 2021, the market expects US soybeans to be price-competitive and sell at an average discount of over 40 cents/bu to their South American counterpart until the Brazilian soybean harvest begins in February 2021.