By Cai Chen, senior reporter for Fastmarkets AgriCensus

An improving outlook for soybean crush margins in China has reignited strong buying from the country, with trade sources reporting the purchase of up to 40 cargoes of soybeans over the last week, according to at least three China-based sources and one Brazil-based source.

The volume equates to some 2.6 million tonnes and comes amid fresh rumors that Chinese state-backed traders have also stocked up on multiple wheat cargoes in recent days.

While firm details are hard to pin down, traders said that the pace of buying is likely to be maintained in the weeks ahead.

“(The pace) would keep going on for the next period, with around 30 cargoes expected to be bought every week,” a China-based trader told Fastmarkets AgriCensus.

Around 2 to 2.5 million tonnes of soybeans were bought by China from all origins last week, Victor Gusmão, market intelligence analyst at Zairam Agrocommodities in Brazil, told Fastmarkets AgriCensus.

Within those purchases, around 20 to 25 cargoes were out of the US, with Fastmarkets AgriCensus hearing of eight to ten cargoes booked from the Pacific Northwest ports for both 2021 and 2022 shipments, with another 10 to 15 cargoes from the US Gulf ports to cover China’s spot demand in October and November.

China soybean crush margins chart

Looking to Brazil
At the same time, the world’s largest soybean importer also looked to secure soybeans from Brazil, as rumors said another 10 to 15 cargoes have been booked over the last week, with most of them for the new crop and a few for the old one.

“It is mainly due to the continuous improved domestic crush margins,” a trader said.

China’s gross crush margins have almost returned to positive territory since last week, with margins based on beans sourced from the US Gulf for January loading reaching CNY55.25 per tonne ($8.66 per tonne), according to Fastmarkets AgriCensus data.

“Considering the basis premiums between Dalian futures and domestic spot prices in the physical market, crush margins are positive now,” said another China-based industry source.

“There is also the reason that (China) is trying to catch up the delayed purchase pace in the previous months,” the trader added, with the pace of imports slowing down through 2021 amid the drop off in margins, and China still well behind its purchase pace for 2021.

Moreover, the export and operation process in the US Gulf ports, the country’s busiest grain export hub, have returned to full operations just over one month after logistics were disrupted by Hurricane Ida trashing infrastructure at the end of August.

USDA export inspections
Monday’s USDA export inspection data showed 2.3 million tonnes of soybeans had been inspected in the week October 14, with over a million tonnes inspected at the PNW and just under a million inspected in the US Gulf.

China still has 20% of total planned buying for November uncovered at this stage, and is likely to need to pick up nearly seven million tonnes of soybeans before the country can put December’s plan to bed, a trade source told Fastmarkets AgriCensus.

“(The big purchase within one week) is partly because of the restocking purpose from Sinograin,” a China-based trading manager said.

China’s state-owned grain stockpiler Sinograin held an auction of 180,237 tonnes of imported soybeans from reserves on October 14, and is expected to hold another one with 129,629 tonnes on October 21, according to notices from the National Grain Trade Centre (NGTC).

However, no source from the US has been able to confirm the large volumes booked by China over the last week.

USDA’s 24-hour private exporter notices only reported a total of 1.38 million tonnes of soybean over the previous week, with 462,000 tonnes for delivery to China and 920,750 tonnes covered under the unknown destinations category.

By the time of publication, China was reported to have bought another two cargoes on Monday from the US PNW ports for February 2022 shipment.

This article, by Cai Chen, was first published to agricensus.com on Tuesday October 19.

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