China may cut soybean purchases amid record stocks and negative crush margins

China may reduce soybean imports in the coming months due to weak feed demand, negative crush margins and high inventories. Private crushers have already covered much of their needs through early February with supplies from Brazil, Argentina and state reserves.

Soybean stocks at 111 Chinese crushing plants reached 7.96 mln tons as of September 25, the highest level in at least 15 years. In the first three weeks of September, Chinese buyers booked around 50 soybean cargoes, the lowest volume in four years.

Negative crush margins are adding further pressure. Margins for US soybeans scheduled for November shipment are estimated at minus 120–200 yuan/t, while Brazilian soybeans are around minus 120 yuan/t. Under these conditions, commercial buyers have little incentive to make additional purchases.

US soybeans also remain less competitive due to an additional 10% duty. Chinese state-owned companies have already purchased around 13.7 mln tons of US soybeans, while private crushers continue to favour South American supplies.

Weaker Chinese demand is adding pressure to the global soybean market during the peak US harvest period. Chicago soybean futures have fallen by around 1.5% so far this week, with further direction likely to depend on a recovery in crush margins and the pace of Chinese buying.

Tags: China, soybean, oilseed crushing