Brazil’s FOB soybean meal basis drops to discount to CBOT
Brazilian FOB Paranagua soybean meal basis levels for nearby loadings have dropped to a discount to Chicago Board of Trade futures for the first time in five months amid rising international prices, thin export demand and positive prospects for the country’s soybean harvest.
On Nov. 17, S&P Global Platts assessed the Brazil’s FOB Paranagua port differential for January shipment at minus $3/st to the CBOT January (F) contract. It was the first time the basis for a front-month loading moved to a discount since June 10, according to S&P Global Platts data.
FOB Paranagua soybean meal basis has been dropping since mid-October, partially due to a lack of fresh physical demand, with most of the trades recently heard at the Paranagua paper market related to hedge purpose, sources said.
Besides, CBOT soybean meal futures have surged, forcing a correction over FOB premiums in origins as buyers started reducing bid levels, according to market participants. The CBOT F contract, for example, has been trading at nearly $370/st, up by 12% so far this month and its highest level since July 2021, supported by improving demand from US poultry producers and some optimism over US soybean exports, according to analysts.
To complete the current bearish pressure over Brazilian FOB soybean meal port differentials, there is a nearly perfect kick-off for the country’s new soybean crop.
Favored by good weather conditions, the planting of the 2021-22 season had reached 79.2% of the expected acreage by Nov. 13, from 69% by this time in the prior cycle, the latest data released by the country’s agricultural statistics agency, or CONAB, showed. Such a pace might indicate larger volumes of soybeans available for the market in January, when the harvest usually picks up.
CONAB sees Brazil producing a 142 million mt record of soybeans in the current 2021-22 crop year, compared to 137.32 million mt in 2020-21. Soybean meal output is pegged at 35.95 million mt, virtually unchanged from the prior season, while exports are set to rise by nearly 1% to 17.05 million mt, still according to CONAB.
Thailand, Indonesia and Netherlands have been the main importers of Brazilian soybean meal so far this year, according to the Ministry of Agriculture.