* VAT reduction to 11 pct from 13 pct seen improving crush margins
* Buyers may delay imports to take advantage, major impact unlikely
By Naveen Thukral
SINGAPORE, May 5 (Reuters) - China's upcoming reduction of the value-added tax (VAT) on imported soybeans could extend a lifeline to unprofitable soybean crushers that are losing more money than at any time in the past eight months, two trade sources said this week.
China plans to lower its VAT on an array of product imports, including soybeans, to 11 percent from 13 percent, starting from July 1, the sources said. That reduction was confirmed in a notice from the Ministry of Finance dated April 28 and posted to its website on May 3.
China, which imports more than 60 percent of the soybeans traded worldwide, is forecast to buy a record 88 million tonnes in 2016/17, almost 6 percent more than last year's 83.23 million tonnes, according to the U.S. Department of Agriculture estimates.
The VAT reduction, flagged earlier last month by the cabinet, is part of ongoing reforms to simplify the country's tax structure and stimulate growth as the world's second-largest economy slows.
"The main aim seems to be to lower the cost and boost consumption," said one of the sources, a veteran oilseed trader with direct knowledge of the matter. "It will also help improve crushing margins."
Soybean processors are suffering under their longest run of negative margins in more than two years. Crushers in Shandong province are losing 211 yuan per tonne processing imported soybeans JCI-SBMG-SHDNI this week.
The lower VAT may prompt some buyers to delay cargoes to arrive after July 1, but it is unlikely to have a major impact on overall soybean trade flows.
"We might see a slight drop in imports towards the end of June, as buyers will try to ask the ships to slow down or wait before arriving on the coast," said the second source, who works at an international trading company which runs crushing plants in China.
Both sources declined to be identified as they were not authorised to speak to the media.
China's soybean imports in May and June are estimated at between 8 and 9 million tonnes per month, propelled by strong domestic demand for soymeal and a rapid post-harvest movement of cargoes from Brazilian ports boosting shipments, they said.
"Vessel loading at Brazilian ports has been very fast, so ships will arrive earlier than expected. Buyers will not be able to cause too much delay," said the veteran oilseed trader.
China imported 6.33 million tonnes of soybeans in March, a record for the month. That is up 3.8 percent from a year ago and is 14.3 percent higher than February's 5.54 million tonnes, its General Administration of Customs reported.
Reporting by Naveen Thukral in SINGAPORE; Additional reporting by Dominique Patton in BEIJING; Editing by Christian Schmollinger