EU heard buying US soybeans to export soyoil back to the US: trade

Importers working for member states of the European Union bought US soybeans to crush and export soyoil back to the US earlier this week, in a highly unusual move, trade sources have told Agricensus Friday.

Several sources spoken to by Agricensus confirmed the trade, or said that rare market move was “highly possible.”

In a flash sales update, the US Department of Agriculture (USDA) reported fresh old crop soybean sales of 165,000 mt to Spain on Tuesday, and many market participants believe those volumes were inhouse deals aiming to re-export soyoil to the US after the beans are crushed in Europe.

“We thought that was a joke after the Spain announcement, but we've learned that it could work,” Futures International’s Terry Reilly told Agricensus.

Large companies could be taking advantage of idle crush capacity in Europe and the high demand from the US biofuels sector to make this cross-border flow economically viable despite the high freight costs involved.

Agricensus learned that the effective offshoring of the US crush to Europe might have started a couple of weeks earlier, with rumours that at least two large multinationals have done it.

On Friday, the USDA announced another round of fresh old crop US soybean sales, this time with 197,000 mt sold to unknown destinations.

While there was no confirmation as to whether this could also be headed to Europe to be crushed and re-exported to the US, many speculated that it could be the case.

New market trend?

Albeit somewhat counterintuitive, this opportunistic cross-border trade dynamic could gather steam looking ahead.

“Depending on tariffs and the certification process this could be a frequent thing in 2023/24,” Eduardo Vanin, the head of analysis at Brazil’s brokerage Agrinvest told Agricensus.

“[That could] benefit plants along the southeast and the Gulf… there is need [for more competitive soyoil] in selected US locations, basis premiums reflect that,” Reilly said.

On the other hand, other sources said this should be only a short-term fix before the US’s new soybean crush capacity comes online.

That said, the offshoring of US soybean crush to Europe could still have market impacts depending on the volumes involved.

“Imagine what could happen with soymeal prices if the US increases significantly its crush using Europe’s idle capacity… if I was a Brazilian crusher I would be worried,” Vanin said.