China is preparing to import soybean meal from Brazil as part of broader efforts to diversify sources of the animal feed ingredient, ease a near-term supply shortage and curb inflation risks.
Traders are taking steps to bring in the first Brazilian soymeal shipment to China after Beijing gave the go-ahead a couple of months ago. Even though the initial volumes may be small, the move represents another step in Beijing’s efforts to find new sources of agricultural supplies to bolster its food security.
The decision, coming soon after China opened its market to Brazil corn imports, is another boost to trade between the world’s biggest agricultural exporter and the biggest buyer of soybeans. Brazil is the world’s second-biggest soymeal exporter, behind Argentina, shipping 20.25 million tons in the 2021-22 marketing year. China only imported 60,000 tons from the global market over that period.
China doesn’t usually import soymeal, instead buying massive quantities of beans from Brazil and the US to crush into meal for livestock feed and cooking oil for its food services sector. Smaller purchases earlier in the year contributed to a soymeal shortage, with prices soaring to a record in some provinces.
China has approved 14 Brazilian facilities to ship soymeal, including some that belong to Bunge Ltd, Olam Group Ltd and Coamo, one of the world’s largest agricultural cooperatives, according to a list published recently on the Chinese customs website. This indicates that China could become a bigger buyer of soymeal when margins are profitable.
At least 30 sites applied to the Brazilian Agrictulture Ministry for a licence to export soymeal to China, according to people familiar with the matter, who asked not to be identified as they’re not authorised to speak publicly. In addition to the 14 approved, five are under review, three are waiting to be reviewed, two have issues to fix and three were denied, which may soon bring the total number of authorised facilities to more than 20.
by Tarso Veloso & Hallie Gu, Bloomberg