Brazil soy premiums nosedive amid super crop, weaker Chinese demand

Brazil soy premiums nosedive amid super crop, weaker Chinese demand

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SAO PAULO — Brazilian soybean port premiums have fallen to historical lows in recent days amid lukewarm Chinese demand while the country reaps a record crop, analysts and traders said.

The premiums’ levels fell to as low as -200 basis points per bushel this week in ports like Paranagua for May shipments, surprising some by the magnitude of the decline.

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“I had bet at the beginning that the soybean premium would reach -50, -60 basis points, due to the size of the crop,” said Eduardo Vanin, an analyst with Agrinvest. But as the season progressed and premiums kept sliding, he said fewer Chinese purchases were to blame.

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Vanin estimated premiums at -200 for May and -160 for June shipments amid Brazil’s super crop, which at above 153 million tonnes is 22% more than last year’s drought-affected harvest.

Sol Arcidiacono, an analyst at HedgePoint Global, noted China’s demand had waned as soy crushing margins there fell, affecting immediate purchases from Brazil.

Anec, a trade group representing global grain exporters in Brazil, said Chinese imports from the South American nation fell by an annual 9.8% to 13.297 million tonnes in the first quarter.

Sergio Mendes, Anec director, noted also that logistical bottlenecks affected premiums, apart from the huge crop and frail Chinese demand.

“When you predict a crop as big as ours and that forecast is confirmed, evidently there’s a price to be paid,” Mendes said.

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Soy premiums reflect supply and demand dynamics against benchmark contracts traded in Chicago, resulting in the “free on board” price for a given month of shipment out of a country.

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Two analysts said China is unlikely to import a forecast 96 million tonnes of soy as predicted by the USDA. One lowered his estimate to around 90 million tonnes.

Abiove, a Brazilian oilseeds crusher group, predicted Brazilian soybean exports would reach 93.7 million tonnes in 2023, 1.4 million tonnes above its forecast in March.

It declined to comment on market movements. (Reporting by Ana Mano; Editing by Sharon Singleton)

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