China's soybean imports fell 12% year on year to 6.71 million mt in April, customs data released Thursday showed.
Market sources attributed the fall to the slower customs clearance process due to coronavirus pandemic-related quarantine delays at Brazilian and Chinese ports.
China -- world's largest soybean buyer – has imported 24.5 million mt of beans in 2020 so far, compared with 24.14 million mt during the same period last year, customs data showed.
April customs report may not be reflecting actual Chinese demand levels for soybeans, as data from Brazil shows shipment to the Asian giant has increased significantly. China has ramped up soy purchases as the pandemic spreads globally, anticipating future uncertainties, market sources said.
The South American nation has shipped out 25 million mt of beans in the first four months of 2020 to China, with 12 million mt supplied in April to the Asian nation, Brazilian trade data showed.
An additional 5.5 million mt of Brazilian soybeans shipped during April could still be on their way or awaiting clearance at the country's ports, the sources said.
China is also not taking supply-side risks in the coming months. For May and June, its soy import coverage is estimated to be almost complete, market sources said.
In fact, Chinese buyers are now mostly focused on booking July and August shipments of cheaper Brazilian beans.
While some Chinese commercial buyers continued to cover soy demand for September from Brazil due to competitive prices compared to US origin, they also kept a close watch on Chinese state-owned buyers' next movement on US soybeans, market sources said.
"State-owned buyers might continue to buy US soybeans for either national reserve purpose or commercial crush purpose, but commercial buyers have to consider and evaluate the potential political risks in purchasing US soybeans," a Chinese crusher said.
US-China trade relationship seems to have hit turbulence recently due to cross-allegations on the coronavirus pandemic mismanagement, market sources said. Phase 1 trade deal could be under pressure if pandemic-related diplomatic spats continue between Beijing and Washington.
Brazilian soybeans have gained price advantage over their main competitor, US-origin beans, in recent weeks because of a record high average output forecast of 123 million-125 million mt by agro analysts.
A falling Brazilian real, which has lost almost a third of its value since January, has added to Brazilian soy's price competitiveness.
Market participants said Brazilian soybeans were currently selling at a discount of 15-20 cents/bushel to US beans at Chinese ports.
S&P Global Platts assessed SOYBEX FOB Santos for June loading at $335.67/mt Wednesday, while SOYBEX FOB New Orleans were assessed at $329.04/mt.