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China's soybean demand likely to ease in February: sources


Most crushers set to resume operations in March

Low crush margins hampering soy demand

  • Author
  • Asim Anand    analysis by Ivy Li
  • Editor
  • Jonathan Fox
  • Commodity
  • Agriculture

New Delhi — Soybean demand in China, the world's largest importer of beans, is likely to ease in February due to the Chinese New Year celebrations, which falls on Feb. 12, market sources told S&P Global Platts.

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Although the public holidays last for seven days starting Feb. 11, soybean demand among China-based crushers generally shrinks a couple of weeks before the holidays.

Chinese crushing plants have been gradually shutting down for the long holiday, and most crushers will not resume operations before March, a crusher said.

Buying interest among China-based crushers for raw soybeans has also remained low in recent days due to very low crush margins.

The China Soybean Gross Crush margin (March) was assessed at $21.40/mt on Feb. 1, the lowest value since Dec. 10, according to Platts data.

In a typical calendar year, China starts importing huge volumes of heavily discounted Brazilian soybeans in the latter half of January.

However, soybean harvest delays in Brazil mean crushers in China will either buy the more expensive US soybeans or wait for the Brazilian harvest to pick up pace starting in last week of February, a Beijing-based agricultural consultancy said. And most China-based crushers prefer to wait for the Brazilian soybeans amid the pressure of low crush margins, it said.

The Brazilian soybean harvest for 2020-21 marketing year, which runs from February 2021 to January 2022, has made its slowest progress in a decade as unrelenting rains hampered field activities, agricultural consultancy AgRural said Feb. 1.

Brazilian soybean farmers were able to harvest only 1.9% of the projected acreage as of Jan. 28, compared with 8.9% last year, the consultancy said.

Typically, China purchases close to 5 million mt of soybeans in February, with Brazil supplying over 90%. But according to analysts, China's imports in February are likely to stay close to 4.5 million mt.

Both Brazil and the US -- the world's top soy suppliers -- account for over 90% of the total beans purchased by China every month.