US Gulf soybeans start to compete with Brazilian product in China market

China, the world's largest importer of soybeans, has been actively purchasing soybeans for nearby shipment, with product from the US Gulf starting to compete with beans from Brazil.

For July shipment, ample supply of Brazilian soybeans has them the more competitive option, but for July-August and August shipments, old crop US Gulf soybeans are coming in cheaper than Brazilian product.

On June 9, one US Gulf cargo of July-August shipment was reported traded at 318 cents/bu over July(N). With the quality spread at 13 cents/bu between US Gulf and Brazilian soybeans and 5 cents in carry between July and August shipments, the traded value was equivalent to a Brazil August cargo at 333 cents/bu over July(N), 2 cents/bu cheaper than the sharpest offer for Brazil August shipment at 335 cents/bu.

"This week, US Gulf soybeans were offered on par or 1-2 cents/bu lower than Brazil soybeans for August shipments," a Chinese crusher said.

Nonetheless, there was limited downside to US Gulf soybeans. "With the potential downward revision of soybean inventories in the US for 2021/22 due to higher-than-expected exports, there will be a tighter supply of US Gulf soybeans of August shipment, so Brazilian soybean prices might need to go lower in order to compete for better demand," a Chinese trader said.

Chicago Board of Trade futures rallied overnight, gaining about 30 cents/bu. Market participants are now switching their focus to the release of the USDA's WASDE reports later June 10.