CFR China soybeans trade at below netback cost as traders hit bids

Soybeans delivered into China are trading at a theoretical discount to the origin price as a fall-off in futures over the...

Soybeans delivered into China are trading at a theoretical discount to the origin price as traders hit CFR bids in an attempt to lock in profits amid falling futures prices over the past week.

Several CFR deals were heard Thursday overnight at prices that netback to a level of about $1-1.50/mt below origin prices at the port of Paranagua, as traders who had contracted soybeans earlier in the year at much lower levels sought to book profits.

Cargoes sold on CFR basis to China for March and July 2021 on Thursday were valued at 148 c/bu over March futures, and 176 c/bu over July futures, respectively.

When using freight to calculate netbacks to the port of Santos, these levels equated to 70 c/bu for March and 94 c/bu for July, meaning the netback levels were 3-4 c/bu under bids for beans on a FOB paper Paranagua basis.

“Paper is trading at origination levels, but China is way below that. Brazil have longs that are super in the money and they will sell where they find demand,” said one source.

“Bids on a CFR basis are being hit, but FOB sellers want more than the netback value,” said a second source.

Typically, soybeans traded on a FOB basis at the port of Santos are 5-10 c/bu over the paper market in Paranagua, but one deal overnight suggested Santos was at a 3-5 c/bu premium.

The unusual pattern of trade has arisen because many trading houses have contracted soybeans back in September and October this year – when price levels were much lower.

And for those that have fixed the price with farmers, fears that the fall-off in futures this week could trigger the end of the bull-run has seen many actively seek buyers to take what profits they can.

Futures fell for three consecutive sessions for the first time in more than six weeks this week as end-of-year profit-taking and better weather in South America allayed fears of a reduction in output.

What to read next
Despite the current headwinds, strategic partnerships and continued investment in the right areas, coupled with the underlying strong long-term demand fundamentals, will pave the way for success for lithium producers, according to the participants of the executive panel during the Fastmarkets Lithium Supply and Battery Raw Materials Conference, which took place from June 23-26 in Las Vegas, Nevada.
The US and Europe must adopt long-term, consistent policies and should learn lessons from China, according to lithium industry experts speaking at Fastmarkets’ Lithium Supply and Battery Raw Materials Conference in Las Vegas, US, over June 22-25.
This consultation was done as an adhoc methodology review process, aiming to better reflect the physical market under indexation, considering its reduced liquidity linked to the combination of seasonal demand patterns and the implementation of cross-border import tariffs between the US and China. No feedback was received during the consultation period and therefore Fastmarkets will […]
Fastmarkets has corrected the rationale for its MB-CO-0021 cobalt hydroxide payable indicator, min 30% Co, cif China, % payable of Fastmarkets’ standard-grade cobalt price (low-end), which was published incorrectly on Wednesday July 2 due to a reporter error.
Downward pressure on global steel prices, caused by continued high levels of Chinese steel production at prices below costs, creates incentives than can lead to a rebalancing of global supply and demand and a boost to profitability, World Steel Dynamics chief executive officer Philipp Englin said at the Global Steel Dynamics Forum in New York on Wednesday June 18.
The global steel industry’s move to decarbonize and China’s penchant for lower-grade ores in recent years have uncovered challenges for high-grade iron ore to live out its value in both the blast furnace-based steelmaking route and the direct-reduction iron process, delegates told Fastmarkets during the Singapore International Ferrous Week (SIFW), which takes place from May 26-30.