Traders, farmers sell Brazil unplanted soybeans ahead of US-China deal

Farmers and traders in Brazil have increased sales of soybeans that have yet to be planted as they fear prices could fall after the US and China sign a phase one trade deal on Wednesday, several market sources told Agricensus.

Four to five cargoes of 2020/21 new crop soybeans were contracted on Monday for February and March 2021 shipments in anticipation that improved trade relations between the US and China and a bumper crop this year will hammer prices in Brazil.

Beans sold for loading in Q1 2021 will be planted in the fourth quarter of this year.

“[Sellers] are thinking to exit some more [positions] before the deal… So exiting is to reduce risks,” one soybean trader told Agricensus.

Four other trade sources in the market echoed the view.

“It was said that Cofco bought many yesterday,” the same trader.

The state-owned soybean crush giant Cofco was said to have booked 3-4 cargoes of February and March shipments in Brazil at a price of 134-135 c/bu and 129-130 c/bu respectively, both over March futures.

Shandong-based Xiangchi Cereals and Oils Co., was said to also have bought a February shipment at 134 c/bu over March futures for the 2020/21 marketing year.

Selling interest for 2020/21 new crop continued onto Tuesday’s trade session with trading houses aiming to sell February shipment between 136-138 c/bu over March futures and March shipment between 125-126 c/bu.

The US and China are set to sign a trade deal on Wednesday that is expected to lead to a sharp increase in the trade of agricultural goods from the US Midwest to Chinese consumers.

As a result, traders fear that Brazilian farmers – who are the biggest exporters of soybeans in the world – will lose market share.

Meanwhile, Brazilian farmers in Mato Grosso also kicked off sales of 2020/21 crops earlier than usual with 4.8% sold by the end of December, according to the country’s agricultural body IMEA, compared to nothing the year before.