Soybean Cash Premiums Widen After China Boosts U.S. Purchases

April 16 (Bloomberg) -- Cash bids for soybeans at export terminals near New Orleans widened their premium relative to futures on the Chicago Board of Trade on increased demand for U.S. supplies from China, the biggest global importer.

Today’s so-called spot-basis bid, or premium, for soybeans moved by barge to New Orleans was 46 cents to 52 cents a bushel above the price of May futures, compared with 46 cents to 50 cents yesterday, U.S. Department of Agriculture data show. The premium for delivery next month rose to 54 cents to 55 cents over May futures, from 50 cents to 54 cents yesterday. Bids for June and July delivery rose as much as 3 cents a bushel.

Exporters sold 808,300 metric tons of soybeans in the week ended April 9, double the prior four-week average, the USDA reported today. About half of the sales went to China. U.S. exports will reach a record 32.9 million tons this marketing year, up 4.2 percent from the previous year, the USDA said last week.

“China has not slowed purchases,” said Garrett Toay, a commercial grain analyst for Toay Commodity Futures Group LLC in Clive, Iowa. “There was talk today that China bought another 10 to 15 cargoes” of U.S. soybeans in recent days for delivery in June and July, Toay said. A cargo of soybeans is usually 50,000 metric tons to 60,000 metric tons.

Soybean futures for May delivery jumped 23.5 cents, or 2.3 percent, $10.585 a bushel today on the Chicago Board of Trade, the biggest gain since April 2. The price touched $10.59, the highest for a most-active contract since Jan. 12. The most- active contract rose 1.2 percent last week, the fourth gain in five weeks.

Chinese Demand

China is buying more U.S. soybeans because drought reduced crops in Argentina and farmers in that country are limiting sales in a yearlong battle with the government to cut a 35 percent export tax, Toay said.

Production in Argentina, the third-largest exporter of soybeans, will fall to 37 million tons this year, down 20 percent from last year and the lowest in four years, the Buenos Aires Cereals Exchange said yesterday. Drought and pests will trim yields in some areas by 26 percent, the exchange said.

U.S. exports also have climbed as drought cut output in Brazil, the second-largest grower after the U.S. Brazil’s production will decline 6.6 percent to 57 million tons, while exports may slip 0.9 percent to 25.14 million tons, the USDA said last week.

China’s purchases of U.S. soybeans will remain strong because demand for animal feed and vegetable oil have improved processor profit margins, Toay said.

Dalian Futures

Soybean-oil futures for May delivery on the Dalian Commodity Exchange have risen 15 percent this year and today reached the highest since September. The May soybean-meal contract has risen 28 percent in 2009.

Pork output in China, the world’s biggest producer, will rise 5.5 percent to 48.7 million tons this year, from 46.15 million in 2008, the USDA said today in a report. The forecast is up 5.9 percent from an October projection.

“Soybean crushers are starting to make some money,” Toay said. “Demand for pig feed and vegetable oils is still growing.”