Soybean imports slow down as yuan depreciation pushes up import costs

In recent weeks, demand from China, the number one soybean importer, has slowed, and so far orders for November shipment soybeans are only half of the same period last year, because the recent depreciation of the yuan has made overseas imports expensive.

Traders say that soybean meal prices denominated in yuan have not risen much, putting more pressure on soybean imports. With the US dollar strengthening, this is not economical for crushers.

China's sluggish demand and concerns about its economic growth have already pushed US soybean prices down to $8.55 per bushel, the lowest level in more than six years.

A trader, speaking during a recess at a grain industry conference held in Siem Reap, Cambodia, said China's purchasing pace has slowed in recent weeks because there are many uncertainties in the market. The trader, who declined to be named, said that so far China has ordered about 2 million tonnes of soybeans for November arrival, compared with nearly 4 million tonnes in the same period last year.

Another trader said that ordering for December shipment soybeans has basically not yet begun, with importers staying out of the market to wait and see. This is bad for US exporters, because US soybeans are expected to have a bumper harvest this year, but so far this year US soybean exports have been weak, with export volumes of less than 10 million tonnes, the lowest for the same period in five years.

South American soybean growers will occupy the Chinese market in the final quarter of 2015 (while this period is usually the peak sales season for US soybeans), which may put more pressure on US soybean exports.

Statistics released by the General Administration of Customs of China show that in July China's soybean imports reached a record 9.5 million tonnes, up 27.1% from the same period last year. Of this, 6.37 million tonnes of soybeans were imported from Brazil, 2.28 million tonnes from Argentina, 760,000 tonnes from Uruguay, while imports from the United States were only a mere 57,000 tonnes.