KEY POINTS:
Brazilian soybeans $576/T for Oct/Nov, below U.S. prices
Large Chinese buyers actively taking Brazilian Q4 cargoes
Ample Brazilian supplies to ease tight world supply
Dry weather in U.S. Midwest seen reducing U.S. yields
China, the world's biggest soybean importer, is likely to buy a larger volume of the oilseed from Brazil than usual for September to December, three trade sources said, as prices of new-crop U.S. shipments rise on expectations of lower supply. Following a bumper crop in Brazil, more of its beans will be available later in the year, easing concerns about tighter world supplies following lower planting in the U.S. and an output decline in drought-hit Argentina earlier this year.
"Brazil has plenty of beans to ship, while the U.S. crop is highly uncertain," said Ole Houe, director of advisory services at agriculture brokerage IKON Commodities in Sydney. "Brazil is a safety valve not just for China but for the U.S. as well in case its production drops." Freshly harvested U.S. soybeans typically dominate the global export market from September onwards as the Brazilian export season, which is active from the second quarter of the year, draws to a close.
This year, Brazil, the world's biggest soybean exporter, produced a record crop of around 155.7 million metric tons. Output in the U.S., the No. 2 supplier, is likely to suffer due to lower planting and dry weather, traders said. Large Chinese importers have been actively booking Brazilian cargoes for September and October, taking advantage of lower prices, traders said.
"Brazil beans are still competitive, it still has beans to offer, and in September the main supplier will still be Brazil," said one Beijing-based trader. "Right now, especially this year, there's a very big gap between Brazil beans and U.S. beans."
Brazilian soybeans for October shipment are being offered at $576 a metric ton, including cost and freight, to China, while U.S. cargoes are being quoted above $580 a ton. Usually, buyers are willing to pay premiums of $12-$15 a ton for Brazilian beans, which have a higher protein content compared with the oilseed from the U.S.
DRYNESS SEEN HITTING U.S. OUTPUT The U.S. Department of Agriculture (USDA) in its monthly report last week forecast bumper U.S. soybean output, with record yields of 52 bushels per acre compensating for lower planting this year.
However, traders said U.S. yields are expected to be lower than the USDA estimate as dry weather in key parts of the Midwest is hurting the crop ahead of a key development phase in August.
"Prices are rising and are likely to go higher if we see more dryness next month," said a second trader in Singapore at an international trading company that runs soybean crushing plants in China.
The traders declined to be named as they are not authorized to speak to the media. The benchmark soybean contract on the Chicago Board of Trade rose 1% to a two-week high on Monday after climbing more than 4% last week.
China imported 10.27 million metric tons of soybeans in June, up 24.5% from a year earlier, customs data showed on Thursday, as large purchases of cheap Brazilian beans reached the market.
Source: Reuters & https://www.tradingview.com/news
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