China imported a record amount of soybeans in January, but prices began to fall in anticipation of shipments from Brazil

China, which is the world's largest importer of soybeans, purchased record volumes of oilseeds in the first two months of 2023.

Importers bought U.S. soybeans in anticipation of a pick-up in demand and concerns over a delayed harvest in Brazil.

This, along with lower crop forecasts in Argentina, supported the Chicago Stock Exchange, but weak soybean sales from Brazil amid a record crop could topple prices if exports pick up, so traders will be closely watching demand from China in March-April.

According to the data of the customs service, China imported 16.17 million tons of soybeans in January-February, which is 16.1% higher than last year's corresponding figure and is a historical maximum for this period. The increase in imports is due to processors' concerns about the delay in harvesting in Brazil, which against this background increased purchases of soybeans in the United States, which is the second largest supplier of soybeans to China.

According to CNGOIC estimates, in the week of February 20-26, compared to the previous week, China reduced the amount of soybean processing by 11% to 1.7 million tons, which is 4% higher than the corresponding figure last year. Soybean stocks in the country fell by 30% to 3.7 million tons during the week, which is 20% more than on the same date last year. Stocks of soybean meal amounted to 630 thousand tons (+2% for the week, +80% for the year), and soybean oil - 650 thousand tons (-4%, -15%). Demand for meat and animal feed in China is expected to rise after quarantine restrictions are lifted.

According to AgRural data, in January-February, Brazil reduced soybean exports by 31% to 6 million tons compared to the corresponding period of 2022.

According to Safras & Mercado, forward sales of Brazilian soybeans reached 35.4% of the forecast 2022/23 MR crop, compared to 48.5% at this time last year and a 5-year average of 51.7%. With the forecast of soybean production at a record 152.43 million tons, the volume of sold soybeans is almost 54 million tons, with export estimates at 90-95 million tons. Forward sales of soybeans for the 2023/24 MR season are only 1.6% of the forecasted harvest, while in 2022 during this period they reached 7.1%, and on average for 5 years – 10.6%.

On the stock exchange in Dalian, soybean meal prices fell by almost 5% in February.

Ahead of the USDA release, Chicago May soybean futures yesterday fell 0.9% to $556/t (the same as a month ago), while soybean meal futures fell 1.1% to $538/t ( +3.8% for the month, +28% for the year), although they remain at record high levels since 2014 against the background of declining harvest forecasts in Argentina. At the same time, Argentine processors are actively contracting soybeans in neighboring Paraguay and Brazil to load their own processing capacity while reducing their own production.