Brazil-US soybean spread hits nine-month as trade war heats up

The difference in price between Brazilian and US soybeans loading out of the US Gulf has hit its highest level since November as the bilateral trade war between the US and China heats up in the wake of new Chinese US soybean import tariff announcements.

The price of soybeans loaded out of the Brazilian port of Santos for October shipment hit $374.50/mt on Friday compared with $327.50/mt from the US Gulf, according to Agricensus data.

The spread, which stands at $47/mt, is the highest level since November 12 last year as China’s announcement that it would increase soybean import tariffs to 30% from the current 25% starting September 1 weighed heavily on both the futures and US cash markets Friday.

Cash premium offers for loading out of the US Gulf in October slumped by 7 c/bu as sellers eyed little prospect of renewed Chinese demand anytime soon and bids remained scarce.

Flat prices fell by more than 2% on the day as a result, from $335.50/mt on Thursday. 

Yet Brazilian premiums soared with offers up by 12 c/bu as exporters anticipated an increased of Chinese purchases both on a FOB and CFR basis which outweighed a weaker board and kept flat prices just $1.50/mt weaker on Thursday's value to settle at $374.50/mt.