Brazil soybean premiums sink to all-time lows

Soybean cash premiums in Brazil have dropped to historical low levels amid an ongoing record harvest coupled with slow Chinese demand due to unattractive crush margins.

Platts, part of S&P Global Commodity Insights, assessed the FOB Santos basis for May dates at minus 135 cents/bushel to the Chicago Board of Trade May (K) contract on April 10, the lowest level for a front-month loading in its series started July, 2018.

The FOB Paranaguá basis for the same period, in turn, was assessed at minus 145 cents/bu to the CBOT K contract, also a historical low, according to Platts data.

Such a downward trend has been intensified this week as demand from China, the world's largest importer of soybeans and the top buyer of Brazil's oilseed, seems to be cooling, sources said. The open Chinese demand for May, for example, has been revised down to 9 million mt, compared with 9.50 million mt, previously.

In addition, Brazil itself remains on track to harvest a record soybean crop this year, estimated at around 153 million mt. Harvesting activities for the season have entered the last quarter of the acreage.

Over the past few weeks, Brazilian farmers have sped up the pace of soybean sales, which also has weighed on FOB premiums. Farmers have been fearing further lower prices for the commodity and bearing on mind a possible lacking storage availability as by mid-year the second-corn crop harvest is likely to kick off, participants told S&P Global.