China Seen Canceling Soy Cargoes by Oil World on Stocks

China, the world’s biggest soybean buyer, probably will cancel or postpone delivery of more cargoes from the U.S. and South America because of ample stockpiles in the Asian nation and slowing demand, Oil World said.

China canceled about 400,000 metric tons of U.S. soybeans in the two weeks to March 6, and “more cancellations are likely,” the Hamburg-based researcher said in an e-mailed report. China also canceled 500,000 tons from South America, mainly from Brazil, and “several other cargoes” may be postponed because of ample supplies at Chinese ports, according to the report.

“The intention of China to slow shipments of soybeans in the near term is primarily due to the current large stocks,” Oil World said. “A significant slowing-down of the year-on-year growth in Chinese soybean imports in the April-June quarter could have a bearish impact on soybean prices, unless any new export problems arise in South America.”

Soybean prices have slumped about 4.5 percent since reaching a nine-month high on March 7 on the Chicago Board of Trade, in part on concern about slowing Chinese demand. As of March 6, U.S. exporters sold 27.8 million tons of soybeans to China since the marketing year began Sept. 1, including 1.87 million tons still waiting to be delivered, U.S. Department of Agriculture data show.

Potential Delays

China boosted purchases of U.S. supplies this year as insurance against potential delays in South America, after shipping backlogs occurred last year, Oil World said. Brazil, which is harvesting a record crop, has taken steps to speed up loading at its ports, and the country’s exports have “exceeded expectations,” it said. China’s soybean imports in March may be about 5.5 million tons, bringing purchases in the first quarter to 16.2 million tons, 8 percent less than the prior quarter while still 41 percent higher than a year earlier.

China’s stockpiles of imported soybeans at the end of this month will be about 3.5 million tons higher than at the same time last year, Oil World said. While the country’s imports may be a record 70.5 million tons in the 2013-14 season that ends Sept. 30, 77 percent of the increase in demand will have already occurred in the first half of the marketing year, it said.

Soybean production in Brazil may be 84 million tons, Oil World said, reiterating a forecast made last month. Brazil’s government forecaster Conab last week cut its outlook by 5.1 percent to 85.4 million tons because of dry weather.

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