Soybean imports to China reached a record 12 million tons in May and continue to grow

Against the backdrop of a record soybean harvest in Brazil and lower global prices, China, as predicted, stepped up purchases of cheap soybeans, which supported stock quotes.

According to the preliminary data of the State Customs Service of the country, soybean imports reached a record 12.02 mln tons in May, which was 65% higher than in April (7.26 million tons) and 24% higher than in May 2022. The previous record for monthly soybean imports was set in June 2020 and amounted to 11.2 million tons.

The increase in imports is due to the fact that cargoes whose customs clearance was delayed in April were unloaded in May. Thus, the volume of soybean imports for 5 months of 2023 amounted to 42.31 million tons, which is 11.2% higher than the same figure in 2022. In June, imports may increase to 13 million tons, given the large batches of soybeans loaded in April.

At the same time, the US exported only 1.1 million tons of soybeans in April, which is the lowest monthly figure since 2015, although in total, 50.6 million tons of soybeans were shipped in the season, or 92% of the USDA forecast for 2022/23 MR.

On the Chicago Mercantile Exchange, July soybean futures rose as old-crop stocks dwindled, rising 0.6% to $502.5/t yesterday (+4.6% on the week), while November futures fell 0. 5% to $433/t (+2.6%) on rainfall forecasts.

In the U.S., soybean growing regions are expected to see light and patchy precipitation over the next 7-10 days, but northeastern states of Wisconsin, northern Iowa, Minnesota, and the Dakotas will not see any rain.

This season, Brazilian soybeans remain significantly cheaper than American soybeans, although they usually cost more due to better quality. Soybean prices in Brazil are currently $450/t FOB Paranagua compared to $500-510/t FOB US Gulf, $490-500/t FOB Argentina and $490-510/t FOB Ukraine. Thanks to the low price, the supply of soybeans from Brazil to the United States increased sharply, which was not observed before.

The saturation of the world market with Brazilian soybeans will continue for another two months and will lead to further price declines, especially against the background of improving weather conditions for soybean crops in the United States.