China is experiencing a surplus of soybeans, driven by record-high purchases that have significantly boosted stockpiles. This oversupply comes at a time when demand for animal feed remains low, leading to expectations that prices for products like soyoil and soymeal will continue to decline.
As the peak marketing season for U.S. soybeans approaches (September to December), this surplus could dampen China’s import appetite, putting additional pressure on prices that are already near four-year lows. A Singapore-based trader highlighted that the primary concern is the lack of demand for soybean products, which has resulted in pressured crush margins due to the influx of beans.
Soybeans are primarily processed into soymeal, a key protein source for China’s vast pig population, and soyoil, used mainly for cooking. However, slower economic growth in China is negatively impacting meat demand, with the country consuming nearly half of the world’s pork.
China’s soybean imports in July, mainly from Brazil, are expected to reach record highs, influenced by lower prices and concerns about potential trade frictions should Donald Trump return to the presidency.
Analysts note that while pork prices have risen, this is largely due to a tight supply of hogs rather than increased demand. Hog breeders are reducing sow herd sizes and delaying slaughter to sell heavier pigs, in line with government directives aimed at curbing overcapacity.
Data shows that China’s pork output declined in the second quarter compared to the previous year, with the pig herd shrinking to 415.33 million head from 408.5 million. As a result, benchmark Dalian soymeal has dropped nearly 8% over three weeks, and soyoil fell around 4% last week. Crush margins have remained negative since early June, with processors in Rizhao facing losses exceeding 600 yuan per ton, marking the steepest decline since February.