* Sunrise Group says to cancel 33 Brazilian soy cargoes
* China soybean cancellations weigh on CBOT futures
* Buyers may renegotiate deals with Brazilian suppliers (Updates with soybean price reaction)
By Niu Shuping and Naveen Thukral
BEIJING/SINGAPORE, March 19 (Reuters) - China’s leading soybean trader, the Sunrise Group, will cancel almost 2 million tonnes of Brazilian soybean cargoes because shipments have been delayed by severe port congestion in the South American nation, a company official said.
A record harvest is expected to see Brazil surpass the United States this year as the world’s top soybean exporter for the first time but severe port congestion means ships are waiting 40 to 50 days to load.
Sunrise, which accounts for more than 10 percent of China’s soybean imports, intends to cancel 33 panamax cargoes, news that helped push Chicago soybean futures to their lowest level in more than a month.
“We will not take these cargoes,” Shao Guorui, a manager in charge of the firm’s soy business, told Reuters on Tuesday. “It is the supplier’s default first for not shipping on time.”
The Sunrise Group is one of the biggest importers of soybeans into China, shipping some 7 million tonnes annually.
The company plans to cancel 10 out of 12 cargoes that had been scheduled to arrive in January and February, but which have been delayed owing to the port congestion, Shao said. Sunrise will also cancel another 23 cargoes that had been contracted for shipment between April and June, he said.
Speculation that buyers of Brazilian cargoes might cancel orders have swirled in futures markets for several days. Benchmark futures prices have dropped almost 5 percent over the last week.
Cancellations from China add to market jitters by raising concerns that demand is slipping from the buyer of 60 percent of the world’s traded soybeans.
However, the slide in prices in both futures and physical markets means Sunrise will probably be able to negotiate cheaper prices for replacement supplies, traders and analysts said.
Ironically, buyers who cancel deals will probably have to source the bulk of their replacement supplies from Brazil anyhow in the second and third quarters because rival exporter the United States is running thin on stocks.
Brazilian soybeans are being offered around $572 a tonne, including cost and freight, for shipment to China in May, down from $600 a tonne quoted in February, traders said.
“As a result, buyers are trying to cancel deals which they signed at much higher prices,” said a trading manager with one international trader based in Singapore.
A record harvest in Brazil and crimped demand owing to port congestion are reflected in premiums over Chicago futures prices paid at Paranagua port, a key port for soybean exports, which turned negative last week for the first time in the 2012/13 crop year.
“Another reason for cancellation is crushing margins have turned negative on beans for arrival in the next two to three months. This will lead to losses for importers,” said the trading manager.
Soybeans are crushed to make soyoil, used for cooking and soymeal, a key ingredient in animal feed.
A fall in pork prices in China adds to the pressure on soybean prices. Pork prices have fallen 16.2 percent since late January as supply exceeded demand and the downtrend will persist in the near term, the country’s top planner said last week.
China’s soybean imports are estimated to climb to about 12 million tonnes in May and June, with the arrival of delayed cargoes, traders said. The country’s purchases in January and February fell 9 percent to 7.68 million tonnes from a year earlier.
Brazil is expected to produce a record 82.1 million tonnes of soybeans this year, according to official estimates, up from 66.5 million tonnes produced from a drought-hit crop last year. (Editing by Clarence Fernandez and Neil Fullick)