China snaps up Brazil soybeans on urgent demand, tight US supply

14 Sep 2021 | Cai Chen

Chinese soybean importers have turned to Brazil to secure cargoes for October shipment as a shortage of spot supply from both the US Gulf and the Pacific Northwest export hubs makes it hard to met urgent prompt demand from North America, several trading sources have told Agricensus.

The move is unusual as typically the US would be dominant during this period of the year, but a range of issues across the country mean none of the primary export hubs are working at anything close to capacity.

China's crushers were heard scrambling to secure October shipments from Brazilian soybeans to cover short-term demand, with six cargoes out of Brazil booked for next month on Monday. 

Those cargoes were traded at prices between 417 c/bu and 425 c/bu over November futures, hitting the highest level on record.

The large purchases from Brazil during the country's soybean off-season came in the aftermath of Hurricane Ida's hit on the US Gulf at the end of August, with the storm thwarting exports since then.

The damage caused to the US's busiest grain export hub interrupted China's buying pace for US soybeans during the harvest period - when pricing is typically at its most competitive.

At the same time, the US Pacific Northwest ports are also showing a scarcity of supply for soybeans.

"There is no more soybean in the US PNW ports for October shipment. Only a few are left for November and December loading," a China-based trading manager in grain said.

The world's top soybean buyer has been seriously behind its typical purchase pace, with China only completing 74% of total planned buying for October and nearly five million mt more needed to buy to put November's plan to bed, a trading source told Agricensus.

Markets are expecting China to ramp up its soybean purchases from the US Gulf to cover spot demand once facilities in those ports resume operations this week.

However, Brazil-based sources warned that the cargoes could still be executed out of the US, should logistics improve. 

"I think that we could see some future washouts from PNW to Gulf when the US Gulf logistics come back," Victor Martins from Hedgepoint Global Markets told Agricensus.

"Those six cargoes from Brazil to China were for optional origin, which I believe can be switched back to Gulf," he added.