CHICAGO - Cash premiums for export-bound soybeans at the U.S. Gulf Coast, the country's largest bulk grain port, slumped to their lowest in 4-1/2 years on Thursday as recent waves of farmer sales have flooded the market with beans at a time when demand is waning.
Despite the drop in prices, U.S. Gulf soybean exporters are still struggling to compete with cheaper shipments of newly harvested South American soybeans, traders and analysts said.
"Brazil and Argentina are simply cheaper and demand for U.S. beans has basically fallen out of bed," said Terry Reilly, senior commodities analyst with Futures International.
China, which buys around 60 percent of all soybeans traded globally, has shifted to buying South American shipments, which are offered at prices up to $15 per tonne below U.S. prices, Reuters data showed.
The world's top importer canceled a net 110,000 tonnes in U.S. soybean purchases last week, China's largest cancellation of the season so far, according to U.S. Department of Agriculture data.
ADVERTISEMENT
Meanwhile, cash premiums were further pressured by abundant U.S. supplies, with the country's March 1 stockpile estimated at 1.53 billion bushels, the most for that date since 2007, according to a USDA report on Thursday.
More of that supply has entered the marketplace this month.
Many U.S. farmers this month actively sold soybeans left over from last autumn's harvest as futures prices on the Chicago Board of Trade climbed above $9 per bushel after a nearly 6 percent rally in March, the steepest jump in 10 months.
"Active farmer sales have been the biggest issue. Once we pushed prices up over $9, we saw a lot of these guys really clamp down hard and restrict those basis bids," said Rich Nelson, chief strategist with Allendale Inc.
Exporters on Thursday afternoon were bidding 30 cents a bushel over CBOT May futures for March-loaded soybean barges shipped to Gulf Coast elevators. The bid has dropped 10 cents in two days to the lowest point for spot shipments since October 2011.
Free-on-board export premiums were nominally quoted around 35 cents a bushel for April shipments, also a 4-1/2-year low for a spot Gulf shipment.
"We've got more than enough soybeans out there and a competitor to the south that's selling beans cheaper," said a U.S. soybean exporter who asked not to be named. "And this is all happening while the biggest consumer in the world is backpedaling."
