BEIJING, Jan 16 (Reuters) - China's once-soaring soybean demand will slow by about a fifth in the first quarter from a year earlier after record slaughter shrank pig herds, pressuring prices ahead of an expected glut of South American beans, analysts and traders said.

Tapering purchases by the world's leading importer spell further pressure on the benchmark Chicago Board of Trade (CBOT) soybean contract, which is trading at a more than two-year low after a slump of 15% last year.

"There is a big mismatch between feed available and pigs available to eat it," said Darin Friedrichs, co-founder of Shanghai-based Sitonia Consulting.

A downturn in the hog sector late last year triggered a rush to slaughter by farmers battling plummeting prices for their livestock, high costs and an outbreak of African swine fever.

China is expected to import an average of about 18.5 million metric tons of soybeans in the first quarter, down from 23.1 million a year ago, four research and trading firms estimate. At least half the beans are expected to be U.S.-grown.

The figure would be its smallest first-quarter imports since 2020.

"This year, we see large supply coming back from South America but on the demand side, we do not anticipate much increase, given unfavourable hog and poultry margins," said a Shanghai-based trader with an international firm.

The trader sought anonymity in line with the firm's policy.

China buys more than 60% of globally traded soybeans, importing them mainly from top producers Brazil and the United States to crush into soymeal for animal feed and cooking oil.

Its soybean inventories have risen after last year's imports of 99.41 million metric tons hit a three-year high, to stand up 11% from 2022, driven by cheap Brazilian beans and feed demand after pig farms expanded herds.

China’s largest hog breeder, Muyuan Foods Co, sold 6.6 million animals in December, up 25% on the month and 10% on the year.

Its No. 2 firm, Wen’s Foodstuff Group Co, sold 2.97 million hogs in December, up 15% on the month, and 58% annually.

But now, with fewer pigs to feed in the world's biggest breeder, Dalian soymeal futures have fallen 8% this month to their lowest since August 2023.

"Crushers are suffering losses due to decrease in soymeal prices," said Rosa Wang, an analyst at Shanghai-based agro-consultancy JCI. "It is unlikely for them to quicken the pace of buying."

Further weighing on demand is Beijing's food security-driven push for feedmakers to lower the soy content in feed, with substitutes such as peanut and sunflower seed instead.

PLENTIFUL BEANS

The tepid demand comes amid larger harvest forecasts of about 52 million tons in the 2023/24 season for third-largest producer Argentina, after drought battered its previous crop, but that will offset drought losses expected in top grower Brazil's crop.

U.S farmers are also likely to plant more soybeans instead of corn this year on expectations of rising demand for soy-based biofuels, Reuters reported last month.

In the eastern province of Shandong, feed meal supplier Qin Shengxiang said orders for soymeal had eased as mills and farms cut costs.

"The market outlook for cattle, sheep and pigs in the first half of 2024 is not optimistic," Qin said. "We will have to wait until the second half of next year to see if things will improve."

Still, for the full year, China's soy imports may rise by 1% to 2% as sow inventories remain high, analysts and traders said.

"Sow inventory is still higher than rational levels," JCI's Wang said. "We are predicting an abundant supply of pigs this year but it will depend on whether the pig farms will liquidate their sows and how fast."

China's end-November sow herd declined 5.2% from a year earlier to 41.6 million, agriculture ministry data showed. (Reporting by Mei Mei Chu Editing by Tony Munroe and Clarence Fernandez)