Analysts and traders said that China will receive record soybean imports during the second quarter after delays in Brazilian shipments, and slow customs clearances, caused a shortage of supply, forcing several processors into a halt.

According to a five-firm average, the world's biggest soybean buyer will import 31.3 million tons of oilseed, a record amount, in the period April to June. This will relieve supply pressure caused by smaller arrivals anticipated during March.

This is an increase of approximately 4.6% from the 29.91 millions tons imported in the second quarter last year as fresh beans harvested from Brazil's bumper harvest flowed into China.

Cheang KangWei, Assistant Vice President at StoneX, Singapore, said that South America soybean prices are higher than those of their counterparts, and Brazilian new-crop soybean is more appealing.

China's recent shortage of soybeans is due to buyers' avoidance of U.S. beans, amid fears over a possible trade war with Washington. Brazil, the world's largest soybean producer, has also delayed its harvest.

Beijing increased tariffs on agricultural products worth $21 billion, including soybeans, as a retaliation last week to new U.S. duties.

The soybean shortage has become more severe and widespread during this time, causing a growing number to stop operations across the country, said Liu Jinlu. He is an agricultural researcher with Guoyuan Futures.

Imports for March will drop

StoneX predicts that March imports will be at a low level of 5,27 million tonnes, a 5-year low.

Stockpiling and high crush rates for livestock feed to meet demand reduced inventories.

Mysteel consultancy data shows that the soybean stock at Chinese ports has decreased to 4 million tonnes by 7 March, a drop of 600,700 metric tons from last week, and a reduction from 892,500 metric tons for the same period in 2013.

One oilseed trader from Singapore said, "Soymeal stock levels are tight and this is reflected in the prices. We expect that situation to improve by April." Prices of soybean products are expected to be under pressure.

StoneX's Cheang forecast a 5.84-million-ton soybean crush in March, which is a decline of 10.1% from February, and 19.1% from the year before.

Rizhao, a processing hub in China, has seen its crush margins increase to over 450 yuan per ton.

The supply shortage was exacerbated by the slower clearance of customs at Chinese ports.

China has increased its quality inspections for imported soybean cargoes in recent years, causing clearance times to increase and delays with the increasing imports of oilseed. A China-based trader said that some shipments can take up to 25 days from the port before they reach the crushing plants, compared to 15 days in most cases. ($1 = 7.2356 Chinese yuan renminbi)

(source: Reuters)