Chinese buyers are looking to shift away from the US to meet their soybean needs following slow US export sales after the Hurricane Ida hit New Orleans- a major grain export hub – late last month.
Hurricane Ida led to suspension of operations and facility damages to major grain elevators in that region of the US.
It has been two weeks past, only a few number of grain elevators resumed loading over Sept. 9-10, and the rest of them were still waiting for power restoration before conducting further examination of damage.
“Major grain trading houses were still reluctant to commit any sales loading before November, as sellers were concerned of failing to deliver cargoes amid logistic uncertainty and unstable status of their facilities,” a source said.
There has been no availability of cargo offers for October shipment from US Gulf for two weeks, multiple Chinese buyers told S&P Global Platts.
However, China was still open for 2-3 million mt uncovered soybean demand for October, with crushers’ purchasing pace heavily falling behind due to negative crush margin profit in domestic market.
As a result, Chinese buyers with urgent prompt needs have been struggling to source prompt soybean cargoes from other origins, Brazil and Argentina, where remaining crops for exports in this season are already low.
A few Brazilian October cargoes reported sold to CFR China at 410-420 cents/bu over CBOT November(X) in the week of Sept. 6-10., with additional 2-4 cargos traded 425 cents/bu over CBOT November(X) overnight on Sept. 13, Platts reported earlier.
The CFR China basis prices rallied quickly driven by the shifted demands linked to US supply constrain, with the basis prices increased 53 cents/bu, or 15% from 362 cents/bu before Hurricane Ida on Aug. 27 to 415 cents/bu Sept. 13, according to Platts data.
US exports season typically starts from October, with more than 60% of export sales to China loaded and shipped out from US Gulf ports.
“US export window may reduce if port capacity in Gulf would not recover in time by October,” a trader said.
US export sales were 8.35 million mt lower than last year, according to USDA data as of Sept. 2, with sales to China, the top buyer at 9.82 million mt, lower from 15.47 million mt a year earlier.
Source: Platts