Chinese crushers snap up Brazil soybeans as margins soar

9 May 2019 | Andy Allan, Johnny Huang

Chinese crushers have bought at least 15 cargoes of Brazilian soybeans for May through July shipment this week as crush margins have soared, and more deals are expected to be signed throughout the rest of the week.

"Crush margins were too good," one analyst at an international crusher said.

Chinese crushers picked up five cargoes last night mainly for June and July shipments at stable flat prices that have not adjusted for lower futures on CBOT board.

Soymeal futures for September delivery trading on the Dalian exchange – the most liquid contract spiked this week – surging almost 5% – as traders placed bets that the price of Brazilian soybeans would rise after news emerged of a potential breakdown in China-US trade talks.

However, an early soybean harvest has led to a steep carry in the Brazil market that has seen flat prices on a CNF basis delivered into China flatline over the past week. This has meant Brazilian premiums have risen to compensate weaker futures, but not yet spiked on the hope that Brazil may be the only origin for Chinese crushers.

"Crush margins reached CNY300/mt ($44.05/mt). Don't know if it will reach CNY400/mt as it did last year due to trade war," another market source said.

According to Agricensus data, crush margins using Dalian futures and cash prices for soybean cargoes have soared 36% since the end of last week to CNY294/mt, or $43.12/mt.

“Brazilian premiums you saw last night were not timely enough to reflect today’s market, and you will see that rise today,” said one China-based trader, explaining that soybean prices in Brazil will rise.

For Agricensus crush margins click here.