China's weak soybean demand dims prospects for US cargoes after tariff snub
SOYB•China's soybean buying is likely to decline in the coming months as weak feed demand, negative crushing margins and high inventories curb imports. Private crushers have largely covered needs through early February, while importers booked about 50 cargoes in September, the fewest in four years.
1. Buying slows
Private Chinese oilseed processors have covered most of their needs through the Lunar New Year in early February with supplies from Brazil, Argentina and state reserves. The article says US soybeans were excluded from proposed tariff relief after last week's Washington summit and still face an additional 10% tariff, making them uneconomical for commercial buyers.
2. High inventories
Soybean inventories at 111 Chinese crushing plants reached 7.96 million tons in the week of September 25, their highest level in at least 15 years. In Sinograin's latest auction, buyers purchased 37.3% of the 514,000 tons offered. Private crushers booked only South American shipments, while state-run companies had bought around 13.7 million tons of US soybeans following a trade deal in May.
3. Margins weigh
Weak animal-feed demand and negative crushing margins are curbing purchases. Margins for November shipments from the US Pacific Northwest and US Gulf were 120 yuan to 200 yuan per ton in the red, while Brazilian soybean margins were about minus 120 yuan per ton. A Chinese processing executive said the company was not interested in further purchases that would incur losses.
