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Brazil soy export premiums surge as ship lineup swells

SAO PAULO - Brazilian soybean export premiums surged over the past week even as the lineup of vessels waiting to load soybeans at local ports swelled, raising demurrage costs as the harvest peaks, shipping agents and traders said on Thursday. Exp...

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SAO PAULO - Brazilian soybean export premiums surged over the past week even as the lineup of vessels waiting to load soybeans at local ports swelled, raising demurrage costs as the harvest peaks, shipping agents and traders said on Thursday.

Export premiums for soybeans from the main southern ports of Santos and Paranagua rose sharply over the past week, even as Brazil enters the peak of a record harvest of a 101 million metric ton crop.

Prompt export premiums increased to 38/41 cents/bushel (buy/sell) over May futures in Chicago <O#S:>, from 24/28 cnt/bu a week ago, price discovery agency Certo said on Thursday. The increase in spot free onboard export prices was similarly reflected in later deliveries until August.

"The real gained sharply against the dollar in the past week, so the only way to keep liquidity in export sales while Chicago prices are stable is to raise the premiums," said Carlos Ronaldo D'Avalo, trader at Granos Corretora.

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The real has gained more than 15 percent against the dollar since mid-January to trade at 3.63 to the greenback on Thursday.

Brazil's crop supply agency, Conab, reported on Thursday that the current soybean crop, now entering the peak of harvest, would yield a record 101 million metric tons. When harvests peak in Brazil, export differentials often turn negative to discounts on Chicago futures.

Moreover, analysts and shipping agents said on Thursday that the line-up of ships waiting to load soybeans at local ports has swelled, along with wait times. This also tends to pressure export premiums lower to offset the cost of waiting to load.

The wait times for newly arriving ships are as long as 57 days at Santos and 47 days at Paranagua, the CGD Group grain analyst said.

The cost of idling a Panamax size ship that holds 60,000 metric tons off port waiting to load can run between $10,000 and $20,000 a day. 

Related Topics: CROPSSOYBEANS
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