US advances soybean sales to China from 2021-22 season at sharp discounts

Singapore — US has accelerated selling soybeans crop from the 2021-22 season -- spread over September 2021 to August 2022 -- to China at significant discount to the current Brazilian crop from the 2020-21 season of September 2020 to August 2021.

Chinese buyers have committed multiple US PNW October November shipments of next season crops in the past few days, with one October cargo traded at CFR China 227 cents/bu over CBOT November (X) on Jan. 5, and another October-November cargo traded at CFR China 225 cents/bu over CBOT November (X) on Jan. 6, according to sources.

Those purchases have been largely driven by attractive price spread between the 2021-22 and 2020-21 crops, according to sources. Compared with the Brazil August shipment, the end month of 2020-21 season, US soybean price for 2021-22 crop was sharply lower by nearly 150 cents/bu, or $55/mt, according to S&P Global Platts data.

Brazilian soybean prices have been well supported as a potential yield reduction in South America has increased global supply concerns for 2020-21 crop season. As a result, Brazilian farmers were holding off on selling at the current price and were targeting higher price for remaining crops.

In addition, a lack of new farmers selling also pushed exporters to add higher protections in selling those positions that were close to the end of Brazil exporting season. "Buying was limited due to big carry offered on July and August shipments, as buyers were reluctant to pay for 15 cent/bu premium, when it was usually at 7-8 cents/bu carry in normal year," a trader said.

Supply concern continued to strengthen soybean prices in all forward curves. "Meanwhile, US may take benefit to presale its next season crops at relative high price," a Chinese crusher said.

Despite large discounts for US 2021-22 crop, trades were seen concluded at around $500/mt CFR China, which was nearly $100/mt above the 2020-21 crop for the same export window.

Monthly average assessment for US September 2020 and October 2020 shipments were at CFR China $407.879/mt and $418.441/mt, respectively, in 2020-21 crop season, according to S&P Global Platts data.