Chinese crushers’ weekly cargo-buying volume of soybeans fell sharply this week as softer crush margins in China and sufficient coverage of December shipment dampened demand of the feedstock material.
The number of soybean cargoes from US and Brazil booked by Chinese crushers and trading houses tanked to 6-7 cargoes last week, more than halved compared with the volume traded the week before.
“China will likely maintain a low stocks level in December, waiting for Brazilian [new] crops,” one China-based analyst at an international crusher told Sitonia Consulting.
The buying pace continued to slow this week as crush margins turned negative.
Fewer than five cargoes of US and Brazilian soybean were heard traded to China this week, one of which was rumored to be a December shipment of 2020/21 crop of Brazilian soybeans contracted at 290 c/bu over January 2022 CBOT futures on CFR China basis.
Another one was a January shipment of the crop at 240 c/bu against March 2022 futures on a destination basis.
Board margins for December shipment of US soybeans from the Gulf slid to -$15/mt and those for the same shipment of Brazilian soybeans also fell to -$16/mt.
For January 2022 shipment, margins for Brazilian soybeans are more competitive against US soybeans with the former estimated at around -$5/mt whereas the latter expected at -$17/mt, based on Sitonia Consulting data.
Despite a slowing pace of soybean cargo buying, China’s demand for December shipment has been well covered.
The world’s largest soybean importing country is expected to buy about 7 million mt in December this year, and more than 90% of which has already been bought.
More than half of the volume of December shipments was purchased from the US, while about 1.3 million mt were contracted out of Brazil.
Importers in China snapped up soybean cargoes For November 2021 through March 2022 cargoes since mid-October this year as crush margins widened significantly.
An average of 25-30 cargoes were booked per week in the past month.