Brazil soybean premiums stabilize at 40 cents over US

Brazil soybeans on an FOB basis out of Santos have stabilised at around 130-135 cents over June futures for June and July loading, with reports that at least 26 cargoes have been booked this week loading out of Brazil with many priced close to those levels.

Thursday was the first day in three weeks that Brazil premiums for beans have been relatively stable for three consecutive days.

Sources claimed good demand at these levels means the market is comfortable paying 35-40 cents more for cargoes out of Santos than those from the US Gulf.

Two brokers said Thursday that cargoes loading June out of the US Gulf were being offered below a 100-cent premium over June futures.

“We have found an equilibrium at these levels,” said one broker, a sentiment that was shared by others.

A second source said fears that China would carry out its threat to tax soybeans had subsided amid rumours that US and Chinese officials were talking about a compromise.

Brazil traditionally prices at least 20 cents above US Gulf material to reflect cheaper freight rates to China, meaning that the additional 15-20 cents is down to better protein offered or a risk premium that China might tax US soybeans.

However, China returned to the US market last week, buying up almost 25% of the 2.3 million mt that was committed for export last week.

Nevertheless, commitments and exports to China from the US are running around 17% down on this time last year at 29 million mt versus 35 million mt a year ago.