China’s Crop Import Curbs Are Causing a Shortage of Soybeans

(Bloomberg) -- The Chinese government’s efforts to limit agricultural imports this year is causing a soybean shortage in the south of the country by leading to longer-than-usual wait times at customs, according to traders with knowledge of the matter.  

Some soybean crushers in the oilseed processing hub of Dongguan in Guangdong province have had to suspend operations for the last three weeks as they can’t get enough supply, said the traders, who asked not to be identified as they aren’t authorized to speak publicly. Cargoes have been delayed at the border for more than 20 days, compared with about five days to be cleared under normal circumstances, they said.

China’s General Administration of Customs couldn’t be reached for comment.

Dongguan is one of the major oilseed crushing centers in China, and is home to factories run by companies including agricultural powerhouse Cargill Inc. and Yihai Kerry Arawana Holdings Co. Spot prices for soybean meal, used in animal feed, in Guangdong jumped almost 7% last week, the biggest increase since March, due to the supply shortage.  

Officials are taking longer than usual to do quality inspections on imported beans, said a spokesperson from Wilmar International Ltd., the parent company of Yihai Kerry. Cargill didn’t respond to an email inquiry on the impact on its operations in Dongguan.  

The world’s biggest food importer has asked traders and processors to buy less foreign grains this year in an attempt to buoy prices and support local farmers amid a slowdown in domestic demand. Authorities initially suggested corn purchases be kept subdued and then later requested halts of barley and sorghum imports, but the measures seem to be leading to longer customs wait times for other crops as well. 

The delays come as commercial crushers become cautious on buying US soybeans due to fears President-elect Donald Trump could impose trade tariffs when he takes office next month, sparking a trade war between the two biggest economies. While there has still been a steady stream of Chinese purchases since the election in early November, traders said most of those cargoes are likely destined for state reserves.

Some Chinese animal feed makers in Guangdong have had to suspend production because of the soymeal shortage, the traders said. Although China has taken steps to increase its domestic supply of soybeans in the recent years, the country still relies on imports for more than 80% of its needs. 

At the moment, the soybean shortages appear to be mainly limited to Guangdong, the traders said, adding that cargoes were being cleared normally by customs in other parts of China.

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