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China: 2021 soybean imports drop 3.8% due to squeezing margins and weak demand

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BEIJING – 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 industry. breeding.

China, the world’s largest 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, data shows of the General Administration of Customs, as the drop in pig margins and the increase in wheat fuel sluggish demand.

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Crushers reduced soybean purchases in the second half of the year, as crushing margins deteriorated due to rising import costs and low domestic soybean prices, said Zou Honglin, division analyst. agriculture from Mysteel, a commodities consultancy based in China.

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

Imports in December, however, rose 18% from the same month a year earlier, reaching 8.87 million tonnes. The numbers were also up from November shipments, the data showed.

“Imports in September and October were particularly weak. Live pork prices fell dramatically in the first half of the year and importers did not want to import too much soybeans because there was a lot of uncertainty about feed demand ”, said Darin Friedrichs, co-founder of agricultural research firm Sitonia Consulting.

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

Shipments from the United States in MY 2021/22 were reduced due to loading delays at ports following Hurricane Ida and a soybean crop in Brazil early in 2022.

However, drought in key soybean growing regions of Brazil, China’s largest oilseed supplier, could cause average yields to hit a 6-year low and reduce production this season compared to estimates. previous ones.

China’s soybean imports hit an annual record in 2020 as crushers increased their purchases on strong demand from a herd of pigs rapidly recovering from African swine fever outbreaks. A growing oversupply of pigs, however, squeezed profits from cattle ranching and pushed crush margins into negative territory in 2021. These fell to a record low of 650 yuan (102, $ 19) per ton in June.

Collapsing pork profitability and a sharp increase in wheat feed use have reduced soy demand, with analysts predicting around mid-2021 that China’s soybean imports for the year may be lower to 100 million tonnes.

Demand for wheat as a raw material could decline in the new year, as corn prices plummet after a bumper harvest, while Beijing recently banned producers and feed users from participating in US wheat auctions. state reserves.

($ 1 = 6.3608 Chinese yuan)

(Reporting by Hallie Gu and Dominique Patton; Editing by Kenneth Maxwell and Richard Pullin)