Spot basis premiums for Brazilian soybeans on a CFR China and FOB Santos basis have rallied sharply over the last couple of days rising to levels 30-50 c/bu higher than at the start of the week on slower farmer selling and collapsing underlying futures prices, market sources said on Friday.
June cargoes were heard traded up from a 30 c/bu discount to a 10 c/bu discount to July futures CFR China overnight Wednesday to Thursday, with bids seen Friday at a 5 c/bu discount against offers at a 2 c/bu premium.
On an FOB Santos basis, trade was heard Thursday at 150 c/bu under July futures for May/June and at 130 under July futures for June, up about 30 c/bu.
Market sources said less aggressive selling by farmers and traders this week was one reason for the recovery in premiums.
The harvest is nearing its final stretch and farmers appear to have found some storage space for their soybeans, they said, and even the usually very active Paranagua paper market was quiet for the early part of this week.
Also, there is speculation that they may now start focusing instead on selling corn as Brazilian farmers traditionally prefer stocking soybeans.
“With the low levels, only those who needed to sell due to full stocks sought business, and now that this euphoria is gone, producers are not accepting such low levels,” one Brazilian broker told Agricensus.
In addition, a sustained fall in the underlying CME futures contracts has helped support the basis premiums, market sources said, with July futures dropping 50 c/bu since last Friday to trade at around 14.09 c/bu as of 0800 Eastern Time Friday.
These futures movements more than compensate basis up trend, and Santos FOB outright prices for June shipment have not shown any rise in prices, which have instead fallen from $477/mt last Friday to $473.75/mt on Thursday.
Others meanwhile noted that the rebound was perhaps to be expected after premiums lost over $1/bu in just a few weeks.
“The rebound in Brazil premiums is not surprising after how much they fell this month,” said Terry Reilly, senior grain and oilseed commodity analyst at Futures International.
Market sources said the big question was whether there was room for premiums to rise any further.
“If there is competition for soybeans yes,” Eduardo Vanin, lead soybean analyst at Brazilian brokerage Agrinvest Commodities said.
“The possibility is good since the domestic industry and China are buying for the same shipment window,” he added.
The downside, however, is that less active buying is expected from China, which is the biggest importer of soybeans globally.
Source : Agricensus