The fast pace of Chinese soybean buying has raised concerns of swollen inventories, at a time of economic slowdown in that country.
Chinese September soybean imports in September were reported at 7.26m tonnes, up 44% from last year, according to customs data.
Imports have fallen for the second consecutive month, but are coming down from record purchases in July.
Imports for the 2014-15 marketing year, which runs to the end of September, were a record 78.3m tonnes, up 11% from the previous season.Chinese soybean imports were a record 59.65m tonnes for the first nine months of 2015, up 13% from last year.
This exceeded US government forecasts of demand by 1.3m tonnes.
“China’s September soybean imports were exceptionally strong for this time of the year,” said ANZ.
But the rapid pace of imports has left oilseed stocks swollen.
According to data from Cofeed, Chinese soybean stocks as of last week were at 6.32m tonnes, up 13% from this time last year.
As well as fast imports, domestic demand has been slowed by the closure of crushing facilities for state holidays in early November.
Limited upside potential
These heavy supplies, combined with an overall economic slowdown, are raising fears over the long term sustainability of Chinese soybean imports.
“Since crushers in China have already stockpiled sufficient quantities […] and economic growth is somewhat slower, imports in the next few months can be expected to be somewhat weaker,” said Commerzbank.
For soybean prices, Commerzbank warned that “upside potential is surely very limited given the ample international availability”.
Helen Plant, senior analyst at AHDB, warned of “concerns persist about the impact of slower than expected economic growth and a slower recovery in the domestic pig herd.”
Chinese soybean exports are driven by demand from the pork sector, the world’s largest.
But the Chinese pork industry has been going through a record kill-off, slashing the size of its hog herd.
This is bad news for long term soybean demand and raises further questions about the sustainability of imports.
A recent revival in pork prices has bought the kill-off to an end, but demand from the sector remains in doubt for the time being, thanks to a slow recovery.
Chinese imports have been recently been supported by the availability of cheap soybeans from South America.
“This is partly related to the fact that China is focusing its demand increasingly on South America, which can deliver at this time of year whereas imports from the US are shipped around the end of the year,” noted Commerzbank.
And currency effects are making South American supplies very competitive, particularly from Brazil, the world’s largest exporter.
The Brazilian real has been the worst performing currency in the world, down 60% against the renminbi over the past year.
(Source – http://www.agrimoney.com/news/heavy-chinese-soybean-stocks-raise-demand-fears–8882.html)