Abundant soybean supply and deteriorating domestic crush margins have forced Brazilian exporters to offer December shipments to China, triggering stiff competition with the US new crop.
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Register NowIn a rare move, Brazilian soybeans for December shipment have been offered at 235-240 cents/bu CFR China over November (X). "It's the first time I see offers for Brazil soybeans for December shipment in my many years of buying," said a Chinese buyer.
Another buyer said that offers started surfacing Aug. 15 and have remained in the market at prices close to November shipments.
Brazilian farmers have been holding on to old crop soybeans, and December offers have been priced on a par with US Gulf Coast soybeans, potential undercutting some US supplies at a time when China almost exclusively buys soybeans from the US. "I think that the tail for US exports is going to be very short this year," said a trader.
Another trader said, "the inverse market [structure] is caused by Brazil offering December shipments cheaper to compete with the US new crop."
China has bought an estimated 23 million mt of soybeans for shipments in the marketing year 2023-24 (September-August) and has about 24 million mt of soybeans between October and January shipments before the onset of Brazil's new crop in 2024.
Record production of corn and soybeans in Brazil has weighed on supply chains and operations at grain terminals, leading to severe port congestions at key export terminals in Santos. "With the current port situation, some buyers have to pay up the inverse and buy a month early for the soybeans to arrive on time for their crush operations," said a market participant.
Soybean exports in November and December from Brazil are likely to compete with corn outflows and could lead to more corn exports to the US as Argentina struggles with a weaker currency and poor corn production in 2023, trading sources said.
Platts, part of S&P Global Commodity Insights, assessed soybean CFR China Month 1 at $577.34/mt on Aug. 17, up $3.95/mt on the day, and China soybean gross crush margin at minus $4.74/mt, up $3.56/mt on the day.