Cofco resells Brazil cargoes and buys US Gulf beans as price arb. opens

Cofco is reportedly selling Brazilian cargoes for October and November shipment while simultaneously buying US Gulf cargoes for November and December as China’s biggest crusher manages inventory and works a price arbitrage between the two regions.

Market sources told Agricensus that the state-owned crusher sold two cargoes on a CFR basis at 273 c/bu for October and November shipment over January futures ($480/mt) while simultaneously buying November and December shipments at 247-248 c/bu over January futures ($470.25/mt).

Given there is a premium of $4-6/mt for Brazilian beans over US ones, there is a significant arbitrage opportunity of $250,000 per cargo.

The reports come as China’s state-owned soybean buyers – Sinograin and Cofco – are buying US soybeans to help the country meet its Phase One trade deal commitments with the US.

According to Agricensus data, over the past six weeks, Cofco and Sinograin have purchased up to 80 cargoes of US soybeans at a time when forecasts of the crop are declining – a dynamic that has seen futures post six-weeks of successive gains and hit price highs not seen since before the current trade war began in earnest in June 2018.