According to the latest customs data, China's soybean imports in October plunged 25% month-on-month and 11% year-on-year. Imports during the first ten months of the year were also down by 8% compared to the same period last year.
The sharp drop is hardly surprising given the African Swine Fever (ASF) outbreak, as well as the ongoing trade tensions with the US. However, that may be about to change as crush margins are at their highest in 9 years and supplies are dwindling.
As soy meal demand eroded in line with the drop in hog population in China oilseed crushing slowed. That also led to a sharp decline in soya oil supplies. As of December 1st, soya oil inventories were at 4.4 million tonnes, the lowest since May 2015. Falling supplies saw soya oil prices surge, pushing crush margins to their highest since October 2010.
It's not only soya oil seeing supplies dwindling. Soybean and soya meal stocks are also at their lowest in many years. Soybean inventories at ports dropped 26% since the middle of October to 4.82mt, the lowest level since December 2014. China does not publish data on its soybean inventories on land; however, according to the USDA, its 2018/19 ending stocks at the beginning of September were 19.4mt, equivalent to about three months of imports.
At only 350,000 tonnes, soya meal port stocks are also at their lowest since October 2013.
Given healthy margins and declining supplies, Chinese soybean imports appear set to rebound strongly. The ongoing ASF outbreak could still act as a drag on demand in the near term. However, that is also improving; although live pig inventory in China was down by 41% year-on-year in October, it was only down by 0.6% from the previous month, suggesting that China's hog population may stop shrinking and start rising soon.
Source:Arrow
The opinions expressed herein are the author's and not necessarily those of The Xinde Marine News.
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