Singapore — CFR China soybeans for month-ahead (September) shipment rose to a nine-month high Thursday, as the market extended a recent rally on the back of strong demand from Chinese buyers.
Not registered?
Receive daily email alerts, subscriber notes & personalize your experience.
Register NowCFR China soybeans rose to to $410.15/mt, as assessed by S&P Global Platts, the highest since November 20. The CFR China basis price reached $2.41/bushel, the highest since November 15.
The market was expected to remain firm in coming days as China was still facing uncovered demand, according to sources.
The CFR China soybean market began rising following an escalation in the US-China trade tension. After the two countries failed to reach a trade deal in May, they placed more tariffs on each other. CFR China soybeans were at $354.94/mt on May 6, Platts data showed.
The main export season for Brazilian soybeans is February to July and, typically, China gradually shifts demand to US origin from September until the following spring and the start of the Brazilian harvest, sources said.
However, after China imposed a 25% tariff on US soybeans on July 6, supply from the US has been halted, and China had had to source soybeans from elsewhere, mainly South America.
"Chinese buyers would not like taking risk to cover forward demand when they see the potential for positive negotiation results to be delivered, as this may allow Chinese buyers to import more US soybeans," a local crusher said.
The accumulated uncovered demand from China, estimated at around 6 million-7 million mt per month, put great pressure on Brazilian soybeans supply.
Meanwhile, CFR China prices have been rising sharply as supply from Brazil is tighter, and with Brazil having made 80% of its soybean exports for this year, according to SECEX. Brazil was expected to export 72 million mt of soybeans in this crop year.
Last week, a large number of buyers rushed into market for Brazilian soybeans for September to October shipments to meet their processing schedule.
Some 30 Brazilian cargoes, or around 2 million mt in total, were sold to China last Wednesday and Thursday, pushing the basis price of Brazilian soybeans up 10% in a week.
"We have little choice but to buy when we must buy to cover the demand," a Chinese crusher said.
-- Jessie Li, jessie.li@spglobal.com
-- Edited by Daniel Lalor, daniel.lalor@spglobal.com