Soy commentary

Soy commentary: Futures surge, as exporters cancel China sales

12 Feb 2018

Futures surged to a near two-week high in trade on Monday as wet weather failed to materialise in key growing areas of Argentina, which pushed up meal prices and beans followed.

Futures hit as high as $10.04/bu, the loftiest level since January 30, as southern Argentina was mostly dry and the north of the country, which has only just completed sowing, received less rain than expected.

By 1800 London time, beans for delivery in March on the Chicago Board of Trade had retraced and were valued at $9.97/bu.

While futures were dominated by talk of the impact of Argentinian weather, which is expected to be characterised by a lack of precipitation this week, the cash markets focussed on export sales.

The USDA reported on Monday that private exporters had cancelled the sale of 455,000 mt to China from the current marketing year, while simultaneously posting export sales of 314,000 mt, albeit with 116,000 mt of that for the next marketing year.

"Was it expected? Probably not. Was it feared? Definitely. No one likes to see US exports cancelled, but it is more of a cancel and replace deal," one market analyst told Agricensus.

A second source told Agricensus that it was probably largely to do with economics rather than politics, with a shipper preferring to take it from Brazil rather than the US.

In terms of basis bids into the Gulf, traders marked them around 37-41 cents over March futures for March loading and 28-35 cents over May futures for April loading.

Including elevation charges of around 5 cents, that equated to around 42-47 cents and 33-40 cents.

Agricensus assessed at 45 cents over March futures for March loading ($382.75/mt) and 38 cents over May futures (384.25/mt) for April loading.

With Brazil and Argentina on national holidays, Agricensus did not assess those FOB prices.

With CIF prices still marked around 156 cents over March futures for March loading, Agricensus assessed at $423.75/mt.

In Europe, offers were heard around $413/mt CIF by one source.

AgriCensus Soy Price Assessments 12 Feb 2018

USD $/mt spot +/- Month 1 +/- Month 2 +/-
CIF China 423.75 +3.50
CIF Netherlands 410.00 +3.00
FOB Brazil N/A N/A N/A N/A N/A N/A
FOB Argentina N/A N/A N/A N/A N/A N/A
FOB US Gulf 382.75 +5.75 382.75 +5.75 384.75 +5.50
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