China’s 2021 soybean imports fall 3.8% on lower margins and weak demand

China’s soybean imports in 2021 fell from a year earlier, the first annual decline since 2018, customs data showed on Friday, depressed by weakening demand from its huge livestock sector.

China, the world’s top buyer of soybeans, imported 96.52 million tonnes of oilseeds in the 12 months of 2021, down 3.8% from 100.33 million tonnes in 2020, the data shows. from the General Administration of Customs, while the decline in pork margins and the increase in wheat are fueling dampened demand.

Grinders reduced soybean purchases in the second half of the year as grinding margins deteriorated due to higher import costs and lower domestic soybean meal prices, Zou Honglin said, an analyst in the agriculture division of Mysteel, a China-based commodities consultancy.

“Domestic pork prices have plunged, lowering pork margins and downstream demand for soybean meal. The practice of using wheat to replace part of corn in animal feed has also reduced the demand for soybean meal,” Zou said.

December imports, however, increased by 18% compared to the same month of the previous year, reaching 8.87 million tonnes. The numbers were also up from November shipments, the data showed.

“September and October imports were particularly weak. Prices for live pigs fell dramatically in the first half of the year and importers did not want to import too many soybeans as there was a lot of uncertainty about feed demand,” said Darin Friedrichs, co-founder of agricultural research firm Sitonia Consulting.

“It also appears that buying in the US Gulf has been slow due to logistical disruptions. Many buyers just decided they could wait for the new crop from Brazil. This could create an interesting situation depending on the situation. evolution of the heat wave and crop losses in South America,” Friedrichs said.

Shipments from the United States in the 2021/22 marketing year have been held back due to port loading delays following Hurricane Ida and an early 2022 soybean harvest in Brazil.

However, drought in key soybean producing areas of Brazil, China’s largest oilseed supplier, could push average yields to their lowest level in 6 years and reduce output this season compared to previous estimates. .

Chinese soybean imports hit an annual record in 2020 as grinders increased purchases on healthy demand from a pig herd rapidly recovering from outbreaks of African swine fever. However, a growing oversupply of hogs has reduced livestock profits and sent grind margins into negative territory in 2021. These have fallen to record lows at minus 650 yuan ($102.19) a ton. in June.

Collapsed profitability in the hog sector and a surge in feed wheat use weighed on soybean demand, with analysts predicting in mid-2021 that China’s soybean imports for the year could be below 100 million tons.

Demand for wheat as a commodity could decline in the new year as maize prices fell after a bumper harvest, while Beijing recently banned producers and feed users from participating in wheat auctions. from state reserves.*:nL1N2RB0AO*:nL1N2TF04R
Source: Reuters (Reporting by Hallie Gu and Dominique Patton; Editing by Kenneth Maxwell and Richard Pullin)

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