Chinese state-owned soybean importers have ramped up their purchases of both 2021/22 old crops and 2022/23 new crops from the US in the first half of this week as Brazilian harvest continued to lag behind the average pace in recent years.
State-owned importers are said to have bought 20-30 soybean cargoes this Monday and Tuesday despite negative crush margins in China, according to five trade sources.
These cargoes are heard to be contracted for March and April 2022 shipments from both US Gulf and the Pacific Northwest. In addition, state-owned stockpiler Sinograin also bought 5-8 cargoes of December shipment of 2022/23 US soybeans from the Gulf.
Chinese buying interest turned to the US during a season when Brazilian soybeans are supposed to be more competitive than US ones.
But slow harvest progress in the South American country has forced farmers to hold back their sales, pushing the cost of soybeans up to a level that is nearly on par with US soybeans for spot shipment.
Farmer sales of 2021/22 soybean crops in Brazil are said to have only reached less than 40%, which is about 15 percentage points below the average figure of the past four years.
Apart from slow harvest and farmer sales in Brazil, negative crush margins in China and the uncertainty surrounding the Black Sea region continued to put private Chinese importers on the sideline.
Many buyers told Sitonia Consulting that it is simply too expensive to buy any cargoes for March or April currently.
In the meantime, the Chinese market hopes to see a weakening soybean price in the next two months as state stockpiler begins to auction 4-5 million tons of national soybean reserves.