APRIL soybean imports to China fell to 6.9 million tons, much lower than expected, as arrivals were delayed because of tougher port inspections and a tax change, said traders and analysts.

The 13.7-percent drop from a year ago to less than 7 million tons caught the market by surprise. China had been expected to take 8.5 million tons in April, higher than last year, amid good crushing margins in the world’s top buyer of beans.

The lower-than-expected number appears partly related to a 1-percentage-point reduction from May 1 in the value-added tax (VAT) on agricultural imports, said traders.

A similar move last summer prompted many buyers to delay clearing soybean shipments through customs to take advantage of a lower tariff, causing a backlog of vessels at ports.

China reduced the previous 11-percent VAT to 10 percent this month.

“From May 1, the VAT was due to decrease by 1 percent so most people would have tried to postpone going through customs [until then],” said a trader with an international trading firm.

The lower imports also came as China prepares for the possibility of an additional 25-percent tariff on soybeans from the United States that threatens to sharply curb trade and send prices soaring.

China imports 60 percent of the oilseeds traded worldwide to make meal for animal feed for its massive livestock herd, with about one-third typically coming from the United States.

China tightened quality standards on U.S. soybean imports late last year, reducing the amount of foreign material allowed in shipments to 1 percent.

The threat of duties on U.S. soybeans has effectively frozen future purchases from the United States, said trade sources.

Some Chinese buyers are canceling orders for U.S. soybeans, a trend that could deal a blow to American farmers if it continues.

April’s imports were up from 5.7 million tons in March. Arrivals for May are expected to be much larger, as delayed cargoes are cleared, and after buyers rushed to stock up on beans from a huge Brazilian harvest, benefiting from good domestic crushing margins.

If tariffs on U.S. soybeans are implemented, China’s crushers would see much tighter supply in the second half of the year, when China typically buys most of its beans from the United States.

Soy imports in the first four months of 2018 were 26.49 million tons, down from 27.54 million in the same period in 2017, the customs data showed.

(SD-Agencies)