Chinese buyers turn to US Gulf for soybeans as PNW runs dry

Chinese soybean importers seeking to fill up on their tariff-free quota of US soybeans have switched their source of supply from the Pacific Northwest ports to the US Gulf (USG) in a move that will likely drive up the cost of buying soybeans for European crushers.

According to market sources, private Chinese crushers entered the USG market to book five cargoes as supply ran short on the west coast on Tuesday.

Chinese importers were said to have bought volume at 170-175 c/bu over November futures on a CFR China basis, equivalent to between $391/mt and $393/mt.

That compares with 32-37 c/bu on an FOB basis - which is higher than current offers of around 34 c/bu.

“Everyone bought PNW very rapidly, which quickly pushed the prices to near parity with USG,” said one trader from an international crusher.

“Basically, there were not many PNW offers [left],” a second source said.

Offers for PNW cash premiums for November shipment were last heard at 155 c/bu over November futures $385.44/mt, which translates to $390.95/mt equivalent on USG basis as PNW offers tend to be 15 c/bu lower than the ones for USG.

“There is a 15 c/bu spread on Gulf [premium]. This is a reasonable range,” the same trader added.

Meanwhile, one Chinese state importer bought several cargoes of soybeans out of the PNW overnight at prices between 148-152 c/bu over November futures.