Soybean Cash Premiums Widen on China Demand for U.S. Supplies

July 27 (Bloomberg) -- Cash premiums for soybeans delivered at export terminals near New Orleans widened for the first time in two weeks against Chicago futures on speculation that China, the biggest global importer, will buy more U.S. supplies.

The so-called spot-basis bid, or premium, offered for soybeans sent by barge to the New Orleans area in July was 65 cents to 68 cents a bushel above the price of futures for August delivery on the Chicago Board of Trade, compared with 65 cents to 66 cents on July 24, U.S. Department of Agriculture data show. The bid widened for the first time since July 10. The average basis rose from a one-month low, gaining 1 cent to 66.5 cents, according to the USDA.

U.S. export prices are about 80 cents a bushel cheaper for delivery to China next month compared with offers from Brazil, the world’s second-biggest exporter after the U.S., said Charlie Sernatinger, a market analyst for Fortis Clearing Americas LLC in Chicago. U.S. prices are $1 cheaper than soybeans sourced from Brazil for shipment in October, Sernatinger said.

“The Chinese are still picking away” at declining U.S. inventories and may soon increase purchases, Sernatinger said. “So far, nothing has been done, but the spread is anticipating that something is going to happen.”

Some farmers in the southern U.S. begin harvesting in late August, increasing inventories the government says will fall to the smallest in 32 years by Aug. 31.

It is still cheaper for some oilseed processors in China to import supplies from the U.S. than to purchase domestic inventories, Sernatinger said.

China will auction 500,000 metric tons of soybeans from state stockpiles tomorrow, the National Grain & Oil Trade Center said on its Web site July 24. The government failed to find any buyers for about 500,000 tons it offered for sale last week because prices were above the cost of importing supplies.

“If no takers are found, the government is expected to try to subsidize sales next week,” to empty state-owned coffers to prepare for the Chinese harvest in October, Sernatinger said.