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Chinese soybean buyers with tariff exemptions resume US purchases: sources

Singapore — Chinese soybean buyers who have obtained a tariff exemption began another round of buying late Monday, purchasing around 18 cargoes of soybeans from the US Pacific Northwest, or about 1 million mt, traders familiar with the market told S&P Global Platts.

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The Chinese government on Monday released additional import exemption permits to soybeans crushers after trade talks last week in the US, and a quota of 27 cargoes was awarded to state-owned and private crushers, according to sources.

Market sources have said that among those purchases, most are Pacific Northwest cargoes with shipment periods between October and December at around 135-150 cents/bu over CBOT November soybeans futures.

"Up to now, some Chinese buyers are still looking for US PNW cargoes and the price of US soybeans might move higher still," a source said.

The most traded November soybean futures contract on CBOT rose 9.75 cents/bu Monday to close at 892.25 cents/bu. At the same time Brazilian soybeans CFR China basis softened, falling 20 cents/bu to 190 cents/bu over November CBOT soybeans futures for November shipment as assessed by Platts Tuesday.

"Not seeing many offers in the Brazilian market, as all the attention has been directed to the US market," a trader said. "CBOT rose on the back of positive signs of Chinese purchases, and this [increase in CBOT soybeans prices] has Brazilian basis under pressure."

According to sources, demand for Brazilian soybeans remain thin.

"Buying interest from Chinese crushers remain weak as many of them are facing negative crush margins now," the trader said.

Since many smaller crushers have yet to obtain a tariff exemption license, they are wary of buying Brazilian soybeans for November shipment," another source said. "There are many uncertainties ahead, together with weak crush margins, that could contribute to a weaker Brazilian basis."

At the same time, US-China trade talks scheduled for next month are causing uncertainty among soybeans market participants. "Although the market focus is shifting to US soybeans, Chinese crushers might still consider buying Brazilian soybeans if Chinese crush margins improve," a Chinese crusher said.

-- Analysis by Jessie Li, newsdesk@spglobal.com

-- Edited by Jonathan Fox, jonathan.fox@spglobal.com

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