Soybean prices in China are falling, following those in Brazil amid a record harvest

According to analysts Platts (S&P Global Commodity Insights), during April 4-10, soybean prices in China fell by 3.9% to $551.98/t CFR, and the premium compared to May contracts on the Chicago World Trade Organization decreased to 0. $05/bushel, the lowest for the first month of shipments from Brazil.

During the month, demand for shipments of Brazilian soybeans decreased slightly. Thus, demand for deliveries in May decreased from 10 to 9 million tons, and for deliveries in June - from 9 to 8 million tons. Only 82% of demand is covered for May deliveries, and less than 35% for June, as Chinese processors restrain purchases in anticipation of further price reductions.

Soybean processing profitability in China is RMB 30-40/t or $4-6/t with shipment in May, so purchases should pick up.

According to S&P Global, soybeans in Brazil are harvested at 83% of the area, which corresponds to the 5-year average level, but farmers are not willing to sell it at low prices, so sales are currently only 45-50%.

Brazilian soybeans for May delivery on FOB Santos traded $1.35/bushel or $50/t cheaper than May futures on the Chicago WTO, the lowest since 2018 for the first month of the season. FOB Paranaguá delivery is trading $1.45/bushel or $53.3/t cheaper than WTO May futures, a historic low, Platts said.

The decline in prices accelerated this week amid reduced demand from China, the world's largest importer of soybeans and a major buyer of oilseeds from Brazil. At the same time, the increase in new crop shipments to ports increases the pressure on domestic prices in Brazil, which in turn will further lower prices in China, even with a shortage of soybean supplies.