Soybean Cash Premiums Narrow as Buyers May Purchase From Brazil

June 12 (Bloomberg) -- The premium for soybeans at export terminals near New Orleans narrowed relative to Chicago futures for a third day on speculation that demand for U.S. supplies will drop as Brazilian prices fall.

The so-called spot-basis cash bid, or premium, for soybeans moved by barge to ports along the Gulf of Mexico this month was 58 cents above July futures, down from an average 58.5 cents yesterday, U.S. Department of Agriculture data show. The cash premium for Brazilian soybean exports has fallen from 55 cents over July futures in Chicago to 5 cents in the past week, said Roy Huckabay, a Linn Group senior vice president in Chicago.

“U.S. soybeans are no longer competitive” with exports from Brazil as sales in the South American country rose, Huckabay said.

Soybean futures for July delivery fell 21.5 cents, or 1.7 percent, to $12.455 a bushel on the Chicago Board of Trade. The price still gained 1.6 percent this week after the USDA on June 10 projected domestic inventories to be the lowest since 1977 on Aug. 31, before the next harvest.

Brazil cash premiums for exports of animal feed made from soybeans disappeared in the past week, dropping from $51 a metric ton more than July soybean-meal futures in Chicago to a discount of $29 a ton as demand slowed, Huckabay said.

“It is cheaper to import soybean meal from Brazil into the U.S. southeast” than to move supplies by train from the Midwest, he said.

Soybean-meal futures for July delivery fell $5.30, or 1.2 percent, to $422.70 a ton in Chicago, after touching $433.40 a ton yesterday, the highest price for a most-active contract since July 7.