With China, the world’s biggest consumer of soybeans, sourcing soybeans from Brazil, the price of Brazilian soy peaked in June.
On Friday, according to data from China’s General Administration of Custom China’s import of soybean in June has jumped by 13.1% from a year ago. Chinese soybean buyers are sourcing their supplies from Brazil rather than pay higher cost and procure them from the U.S.
In June 2018, data from the General Administration of Customs shows China, the world’s biggest buyer of soybean, purchased 8.7 million tonnes of soybeans, up from 7.687 million tonnes a year ago. However, soybean shipments are down by 10.1% from June’s 9.68 million tonnes.
“The figures were within market expectation. Everyone is bringing in large volume of Brazilian beans and building up more stocks in advance on worries of the trade spat,” said Tian Hao, a senior analyst with First Futures.
China’s buying spree of Brazilian soy as pushed up prices for the oilseed in Brazil. The stock of soybean in China has also risen.
The spread between U.S. and Brazilian soy prices offered in China rose to its 5-year high in June 2018 as the U.S.-China trade dispute turned into a trade war with buyers increasingly turning to Brazilian soy to avoid higher tariffs.
“Arrivals will remain high in recent months. Stocks of soybean, soybean meal and soybean oil are all very high. Crushers are struggling with crush margins under such huge stocks,” said Tian.
As of Tuesday, China’s stocks of soybean were at 8.52 million tonnes, which amounts to a month’s worth of consumption; it is also marks its highest stock levels on record since 2010.
Soybean stocks have risen by more than 50% since mid-April, when the trade dispute with the U.S. first escalated.
Crush margins of the oilseed, pressured by high stocks and losses in the pig farming sector, have been negative since late April.