Brazil FOB soybean basis bid at discount on slow loading, weak demand

Cash premiums of Brazilian soybeans in the country's paper market slumped on Thursday, with indications starting as a discount to Chicago futures as traders returned to work and re-positioned their bids to reflect a backdrop of stagnant loadings in the country and slow harvest amid recent rains.

The trading also reflected absent demand from China.

Bids for March shipment in paper Paranagua market was indicated at a 5 c/bu discount to the Chicago March future, down about 20 c/bu on the day, versus offers at 10 c/bu over March futures, according to sources.

“This is the first time a soybean FOB basis trades with a discount under CBOT since 2015,” a source said.

The combination of the slow loading pace at ports, stagnant harvest progress and heavy farmer selling, coupled with the absence of Chinese demand was said to be the trigger.

“There is no loading at some ports,” said one Brazil-based broker.

Buying interest on FOB basis for other forward positions also fell 5-10 c/bu along the curve.

However, prices on CFR China basis remained stable thanks to higher freight that offset the lower FOB values.

March freight from Brazil to China was heard at $51/mt this week with soybean values on CFR China basis rumoured to have been traded at 175 c/bu over March futures.