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After shipping delays, China will cancel U.S. soy imports after cutting US soy imports after shipping delay clip export window

After shipping delays, China will cancel U.S. soy imports after cutting US soy imports after shipping delay clip export window

BEIJING/CHICAGO, December 3 (Reuters) - China's soybean imports from the United States in 2021/22 are expected to rise sharply from last season after loading delays following Hurricane Ida.

An early 2022 Brazil soy crop also reduced the US export window to China, the world's top soybean buyer.

According to analysts and top importers, China's total imports of U.S. soybeans for the marketing year starting on Sept. 1 might drop by at least 20% to less than 30 million tonnes.

Farmers in the United States have just gathered their second largest soybean crop in history, and typically export about 45-45 percent of their annual production.

Over half of those sales go to China, which makes about 70% of its U.S. soybean purchases during the post-harvest period from September through December.

According to U.S. Department of Agriculture data, this year's aftermath of Hurricane Ida - which hobbled crop-loading at crucial U.S. ports for several days in September - resulted in an 81 percent drop in China-bound shipments month from the year before.

The major causes of China's soy demand - crushing and hog production margins - hit a soft patch right during the peak U.S. harvest window, reducing China's appetite for U.S. goods.

According to Refinitiv statistics, U.S. loads increased dramatically in October to over 10 million tonnes, but now have the prospect of an earlier-than-usual start to the 2022 export season out of Brazil, the world largest soy producer.

"The U.S. (soybean) export season had a bad start this year, with Crush margins were low and demand was not good at that time," said Bai Jie, an analyst at COFCO futures.

"It was the impact of Hurricane Ida, which resulted in a squeeze on Brazilian beans," Bai said.

DOWNSIDE DOWNSIDE

Because of a delayed start to the 2021 Brazil export season that extended U.S. sales, soybean shipments to China in 2020-21 were the strongest since the 2016-17 season.

"American beans won't have such opportunity in the coming months, since planting of Brazilian beans is fast this year, so there will be ample beans to be shipped to China in the first quarter of 2022," said Zou Honglin, analyst of Mysteel's agriculture division.

soybeans in the United States have also faced price woes, with export offers trading similar to those in Brazil, where freight costs to China are lower.

According to Mysteel, Brazilian soybeans provide better crush margins for Chinese soy processors, due to higher average protein levels in Brazilian soybeans. Margins for US soybeans shipped out of the Pacific Northwest for February delivery are around 500 yuan ($78.49) per tonne, compared to 684 yuan for Brazilian beans.

"Brazilian beans are just less expensive, and price is king," said a Asia-based trader with a top trading firm.

"WINDOW IS CLOSING" "WINDOW IS CLOSING"

According to a U.S. exporter, Chinese soybean importers have completed nearly all December purchases, and are now filling January and February requirements just as the Brazilian export season builds up.

Brazilian soybeans are about $520 per tonne FOB, with freight of approximately $60 per tonne, according to him. Those shipments from the Gulf Coast were offered about $500 per tonne FOB late last month, with an additional $78 or $80 per tonne for freight to China. Brazil soybeans are about $520 per tonne FOB, with cargo of around $60 per tonne, he added.

"From a US perspective, it's been a bit disappointing. Brazil's been dipping into our export window a little more each year," the exporter added. "Our window is closing."

According to Mysteel's Zou, Brazil's soybean arrivals in November-December will primarily be US cargoes, but Brazilian shipments are expected to rise sharply between January and March to over 6 million tonnes.

This would mark a four-fold increase from the 1.35 million tonnes recorded in the first quarter of 2021.

According to the USDA, China is projected to account for almost 60% of all soybean imports this season, U.S. exporters will not be able to find a single big buyer to replace it. Europe, Mexico, Argentina, Egypt, and Thailand are the next five largest importers, but collectively buy only a third of China's total.

PROTEIN POWER is boosted by a PROTEIN.

Hog manufacturing margins will be a key factor in China's final soy demand next year.

A rise in its pork output in 2021 slowed margins to record lows, slashing the sector's desire for soymeal feed.

However, a rise in pork prices and hog margins is now in the works, and if sustained, soy consumption will rise.

Despite this, South American farmers will benefit the most from any more increases in demand, with Brazilian beans offering higher protein content.

"Pressure for American beans would only grow in the future, as weather in South America remains normal," said a soymeal trader in Shandong province, a major livestock producer in China.

($1 = 6.3706 Chinese yuan renminbi) ($1 = 6.3706 Chinese yuan renminbi)

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