China soybean supply shortage fear grows amid stagnant Brazilian exports

Fears of a soybean supply shortage in China are growing rapidly across the soybean crushing industry as the harvest delay slowed exports of 2022/23 new crops in Brazil.

As traders in China come back from the week-long Lunar New Year holiday, they begin to grapple with the issue of shipment delays due to slow exports in Brazil.

“Crushers here are all asking about vessel arrivals,” said one China-based analyst in response to slow exports out of Brazil in January.

Based on line-up data from shipping agencies in Brazil, soybean exports only totaled less than 428,000 tons as of last week, accounting for only a quarter of the amount exported at the same point last year.

This was largely caused by a slight delay in harvest this marketing year. The harvest of the 2022/23 new crop mostly ramps up in early January whereas the harvest of the previous crop started as early as Christmas 2021.

Moreover, transportation by truck has also been affected by protests and strikes.

According to traders from four different trading houses, the market in general is concerned about severe delays in cargo shipments in February and March.

“It is uncertain whether those delayed cargoes will be ‘washed out’ later or not,” one trader commented.

Corn competition

Apart from logistic issues in the soybean supply chain, rising corn exports out of Brazil have also been competing with soybean for the limited export capacity, particularly shipments to China.

Ever since the Chinese customs approved imports of Brazilian corn in the final quarter of 2022, demand has spiked.

Monthly shipments of Brazilian corn to China were estimated at 600,000-700,000 tons in November 2022 and more than 1 million tons the month after.

Chinese importers are expected to continue buying more corn from Brazil throughout the 2022/23 marketing year as a supply disruption in the Black Sea drags on.