US soybean cargoes bought by China above Brazil prices

Key takeaways:

• China concluded purchases ahead of the summit with the US. Including up to 180,000 tonnes of US soybeans loading December to January at premiums of 250 cents per bushel from PNW and 230 cents per bushel from the US Gulf over January CME futures.
• Additional PNW trade talk ranged 130 to 150 cents per bushel FOB with a cited competitive value at 135 cents per bushel if tariffs are removed. But US soybeans were still deemed not competitive versus Brazilian offers.
• Quality perceptions weighed on demand as US soybeans were viewed as lower quality for many Chinese crushers. While Fastmarkets held Brazil CFR China December premium at 235 cents per bushel equivalent to 485.75 dollars per tonne.

US soybean pricing versus Brazil

Deals were concluded ahead of the meeting between the US and China at the summit in South Korea.

The state-owned buyer was said to have bought up to 180,000 tonnes of the US soybeans, loading from December to January at a premium of 250 cents per bushel from Pacific Northwest port terminals and at a premium of 230 cents per bu from the US Gulf, all over January CME futures, market sources said.

Another trade for soybeans from Pacific Northwest port terminals was rumored to have been traded on an FOB basis at 130-150 cents per bu, over January CME futures, market sources said.

A competitive market value was heard for the US soybeans on the same basis at 135 cents per bu over January CME futures given that the tariffs are removed, according to market sources.

Market sources said that all the US soybeans were not competitive as the traded prices were above Brazilian offers heard on Tuesday overnight.

Quality considerations for Chinese crushers

The US soybeans were of lower oil and water content as compared with the Brazilian soybeans, and hence are often deemed to be of lower in quality for most crushers in China.

“This is like an expensive gift from China before [US President] Trump and [China’s President] Xi Jinping meet tomorrow, even before the tariffs,” a China-based trader said.

Fastmarkets assessed December soybean CFR China (Brazil) premium at 235 cents per bu over January CME futures, unchanged from the previous assessment and equivalent to an outright price of $485.75 per tonne.

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