China July soy imports hit nearly one-year high on better crush margins

China’s soybean imports in July rose 8% from a year earlier, to their highest level in almost a year, customs data showed on Thursday, as importers increased their purchases of Brazilian beans on higher crush margins.

China took in 8.64 million tonnes of soybeans in July, up from 8 million in the same month last year, the General Administration of Customs said. That is up 33% from 6.51 million tonnes in June and the highest since August 2018.

The July imports were below market expectations as some cargo unloadings were delayed, analysts said.

“The main reasons for high imports were that, earlier, crush margins of South American beans were higher, and we were in peak supply season in the production regions,” said Shi Hengyu, chief analyst for vegetable oils at Luzheng Futures.

“The figures were still a bit lower than expected, as offloading at the ports was delayed as crushers were operating at lower rates due to poor demand for meals,” Shi said.

The crush margin, or profit from producing soymeal and soyoil from the bean, rose in May, the month when booking for July cargoes would typically take place.

The crush margins in the soybean processing hub of Shandong province in northern China jumped to 74 yuan a tonne on May 29 from minus 321.67 yuan a month earlier.

“(Buyers) have been executing the agreements of 14 million tonnes of U.S. beans. Then, after mid-May, crush margins jumped significantly, which stimulated the crushers motivation to buy more beans (from Brazil),” said Xie Huilan, analyst with Cofeed, an agribusiness research firm, before the data was released.

China state firms resumed some purchases of soybeans following a bilateral truce in December in the U.S.-Sino trade war, but tensions between the world’s two largest economies escalated again in recent weeks, throwing the market into further turmoil.

Renewed trade tension in May had already pushed up the prices of soymeal on worries of tight supplies of the oilseed as the tariffs on U.S. shipments curbed imports, causing the crush margin to rise.

The year-old outbreak of deadly African swine fever, however, has been dampening overall demand for soymeal in the world’s top pig producer.

China bought 46.91 million tonnes of soybeans in the first seven months of the year, down 11% from last year, customs data showed, amid the trade war and pig disease woes.

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