China soybean buying picks up after fall in CME futures, slow farmer selling

Despite recent rains favoring crops, Brazilian farmers remain cautious

Market sources reported at least twelve or more cargoes of new crop soybeans from Brazil were sold Wednesday through to Friday (November 15-17), with the premiums paid increasing steadily.

February trades for delivered CFR volumes were heard at a 130-135 cents per bushel premium to March CME soybean futures, and maybe as high as 137 and 138 cents per bushel over March CME soybean futures.

March loading sales were heard at 53, 55, 60 and 70 cents per bushel, up from 48 cents per bushel heard paid earlier in the week.

A February-March cargo was meanwhile heard traded at a 97-100 cents per bushel premium, up from 75 cents per bushel a day or two ago.

CME soybean futures, against which most physical cargo sales are priced, have fallen sharply in the last few days on wet weather in Brazil, which is expected to bring some relief to the soybean crop after recent hot, dry weather, as well as favorable weather in Argentina.

“Wide and choppy trading ranges were seen for the US soybean complex today, mainly on positioning ahead of the weekend after grinding sharply lower during the morning because of improving Brazilian weather forecasts,” Terry Reilly, Senior Agricultural Strategist at Marex said in his evening report Thursday.

“Soybeans, soybean meal and soybean oil all ended lower.”

Brazilian farmer sales slower due to crop concerns

A Brazilian analyst meanwhile said slow farmer selling may have contributed to the higher premiums.

“I think it is also because of a lack of farmer selling and concern about the crop failure up north,” Eduardo Vanin, lead soybean analyst at Brazilian brokerage Agrinvest told Agricensus.

“Besides that, Brazilian soybeans for February and March seem too cheap compared to the US.”

The move has also affected FOB premiums in the Brazilian Paranagua paper market, with a surge in the new crop levels.

Premiums for February shipment surged 30 cents per bushel to a 25 cents per bushel discount to March CME futures Thursday, while March followed the same path rising 28 cents per bushel to a 52 cents per bushel discount.

Trades were also heard for March loading at a 60 cents per bushel and 55 cents per bushel discount to futures, with unconfirmed rumors of further trades at a 50 cents per bushel and 45 cents per bushel discount to March futures.

Market sources said the sharp fall in CME futures had indeed played a role in the basis rise, but analysts are also becoming skeptical about the size of the crop Brazil will end up with, leaving fewer volumes to be traded.

One analyst said that it expected the country’s production to reach 162 million tonnes, but that it might be revised lower due to the drought stress in the central-west and excessive moisture in the south, even with better weather conditions forecast in the short term.

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