Brazil port delays may boost demand for US soy

 

 

A backup in soy loadings in Brazil and favourable US-to-Asia ocean freight rates have fueled talk of a possible counter-seasonal switch in some export demand from Brazilian soy to US supplies.

 

No such origin swaps have been confirmed yet. In fact, soy futures on Thursday fell sharply as USDA data showed China late last week cancelled the purchase of 192,400 tonnes of US soy.

 

Soy futures have been volatile, with Thursday's sharp decline following gains earlier in the week. Traders said ideas that US exporters could add to sales which remain at a record despite the Chinese cancellation, added to the volatility.

 

"The freight's a bit cheaper but we have still got capacity problems down at the Gulf and we don't have the bean ownership," a US soy trader said, referring to a lack of supplies in the export pipeline at the moment.

 

US soy exports normally dominate the global market from about September to February. Brazil and Argentina are the world's largest suppliers behind the US, and both South American nations expect record-large crops this year.

 

Strong global soy prices last year prompted many Brazilian farmers to plant faster-maturing varieties in hopes of capturing higher prices offered earlier in the southern hemisphere's export season.

 

Some exporters sold more soy for shipment earlier in the season and some of those shipments have now stalled amid a 14- to 16-day port backup in Brazil, traders said.

 

Meanwhile, Brazilian soy prices have not fallen as sharply as expected despite a record harvest.

 

US Gulf soy prices, including cost and freight to top importer China, are currently about US$3 per tonne higher than Brazil for April shipments, a narrower-than-normal spread for this time of year, traders said.

 

Despite the less-than-smooth transition from US exports to South American, counter-seasonal origin swaps should remain minimal as Brazil's harvest accelerates and Argentine supplies are poised to enter the market in May, analysts said.

 

Traders are turning their focus to the large volume of outstanding sales yet to be shipped, they said.

 

 

US exporters have sold a record 35.7 million tonnes of soy for shipment in the September 2009-August 2010 marketing year, about 93% of the USDA's full-year forecast. Slightly more than 4.7 million tonnes await shipment, with about 2 million tonnes of it for China.