Thursday, September 28, 2023
HomeFoodChina soybean prices plunge amid weaker local demand, higher Brazil farmer sales


To our FREE newsletter
Get all the latest maritime news delivered straight to your inbox.

China soybean prices plunge amid weaker local demand, higher Brazil farmer sales

Chinese soybean prices have plunged this week, with the basis to CBOT futures reaching the lowest levels since 2018, amid higher selling volume by Brazilian farmers and lower demand coverage for nearby shipments, market sources said.

Platts, part of S&P Global Commodity Insights, assessed CFR China soybean M1 basis down 23 cents/bu at 76 cents/bu over May CBOT on March 17, representing a 23% drop on the day and a 37% drop week on week.

“The harvest of Brazil new crop has been 53% done with selling progression lagging behind at 38% approximately as of the beginning of this week,” a Chinese crusher said. As a result, higher selling pressure has made soybean prices for nearby shipments drop continuously over the week, he added.

According to market sources, the weekly selling volume of soybean in Brazil would amount to 6-7 million mt, which could be the highest weekly selling volume since January.

Meanwhile, China demand for soybean weakens due to downgraded consumption and lack of recovery in the hog breeding industry. These have resulted in dropping soybean meal prices and negative crush margins, forcing Chinese crushers to slow down the demand coverage.

As of March 17, the lowest spot soybean meal was traded at Yuan 3,940/mt, the lowest in the past eight months, and down by 11.5% month on month, market sources said. Hence, the replacement crush margin was estimated by the industry at minus Yuan 230/mt on average.

“Given the limited time left for procurement of April shipment and lower bidding ideas among crushers amid lower soybean meal and oil prices, it is unlikely to see the total demand exceeding 8.5 million mt,” a Chinese research analyst said. The initial estimation of open demand for May shipment was at 10 million mt.

For May shipment, the revised open demand was at 9 million mt, down 10% compared with initial estimates from industry sources of 10 million mt.

The drastic drop in soybean prices overnight did catch some buying interests, however, the crushers froze to purchase more when realizing that the CFR China soybean basis continued to drop after the trades, a Chinese trader and broker said.

“Some crushers who had covered May shipments during previous weeks were unhappy with the dropping basis, because they found themselves unable to hedge the basis risk amid volatile basis movements,” an analyst from one of the largest crushers in China said.

For Brazil May shipment, Platts assessed the outright price at $577.61/mt as of March 17, down 3.4% week on week.

Platts assessed the China gross crush margin at minus $1.23/mt March.17, compared to the value at minus $8.12/mt March 16.

Source: Platts

Related Posts


Finance & Economy
Shipping News

Star Bulk Announces the Repurchase of 10 Million of Its Common Shares

Star Bulk announced that it entered into a Repurchase Agreement (with OCM XL Holdings, LP, a limited partnership incorporated in the Cayman Islands, pursuant...

Trafigura announces executive leadership changes

Trafigura Group Pte Ltd. has announced an evolution of its executive team to further strengthen leadership and focus across its global activities during a...

Woori, HMM, KOBC to buy Polaris in prospective $448 mln deal – report

Polaris Shipping Co. is poised to sell its entire stake at around 600 billion won ($447.5 million) to Woori Private Equity Asset Management Co....

Pyxis Tankers Announces Closing of Ultramax JV Investment

Pyxis Tankers, an international shipping company, reported that on September 14, 2023, the Company closed on its previously announced newly formed drybulk joint venture...

Korea’s STX denies rumor that it is backed by Chinese fund

South Korean general trading company STX Corp. has said its largest shareholder is a local investment firm, while refuting the false reports appearing through...

Baltic index scales 11-month peak on strong capesize rates

The Baltic Exchange’s main sea freight index, which tracks rates for ships carrying dry...

Baltic index scales over 9-month high on capesize surge

The Baltic Exchange’s main sea freight index, which tracks rates for ships carrying dry...

Baltic index rises to over 4-month high on stronger capesize rates

The Baltic Exchange’s main sea freight index, which tracks rates for ships carrying dry...

Houston-Japan VLGC freight rates reach multi-year high

VLGC freight rates from Houston to Chiba, Japan, reached $245/mt Sept. 21 for the...

Baltic index snaps 11-session rally as rates for larger vessels ease

The Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk...

Drewry: Port Throughput Index Down 2.1% in July

The Global Container Port Throughput Index fell 2.1% MoM in July 2023, with the small rises recorded in Africa and Oceania having been insufficient...

Vopak: Agreement with Infracapital on sale of Rotterdam chemical terminals

Vopak announces that it has reached an agreement with Infracapital on the sale of its three chemical terminals in Rotterdam (Botlek, TTR and Chemiehaven)...

Port Hedland Iron Ore Exports Edge Up 4% in August

Pilbara Ports Authority has delivered a total monthly throughput of 62.8 million tonnes (Mt) for August 2023, consistent with the August 2022 throughput. The Port...

Thessaloniki, Gdańsk ports to explore synergies

Thessaloniki Port Authority S.A is expanding its role as a port of international importance through a new cooperation with the Port of Gdańsk Authority...

Hapag-Lloyd CEO: Counteroffer for HHLA would not be in our interest

Hapag-Lloyd CEO Rolf Habben Jansen said on Thursday that it would not be in the container shipper’s interest to make an offer for HHLA...