U.S. Soybean Export Premiums at 14-Month High

By Karl Plume

CHICAGO (Reuters) – U.S. soybean export premiums have reached their highest level in 14 months as grain merchants work quickly to ship out a record-large U.S. harvest ahead of the presidential election and amid worries about renewed trade tensions with China, the top importer.

Last week, nearly 2.5 million metric tons of U.S. soybeans were inspected for export, including almost 1.7 million tons destined for China, marking the highest volume in a year according to data from the U.S. Department of Agriculture.

While this surge in exports provides a boost for U.S. farmers dealing with low prices and large supplies, sellers warn that this increased demand may be temporary. This situation could lead the U.S. to experience a surplus of oilseeds as prices remain near four-year lows.

Tariff threats stemming from Donald Trump's presidential campaign are causing some Chinese importers to avoid U.S. shipments starting in January. Instead, they are opting for Brazilian soy, even though it costs up to 40 cents more per bushel than U.S. soy, causing an early shift that is reducing the U.S. export window.

Dan Basse, president of AgResource Co., expressed concerns that U.S. exports in the 2024/25 season may fall 75 million bushels below the USDA’s forecast. The future response of China to tariffs under a new U.S. administration remains uncertain. Trump has pledged to increase tariffs on Chinese products to around 60%, while Kamala Harris aims to maintain the current tariffs.

Terry Reilly, a senior agricultural strategist with Marex, stated the threat of tariffs exists from both parties, with a potential return to normalcy under Harris. However, the imminent cash premiums for immediate U.S. soybean shipments are expected to decline soon as near-term demand is satisfied and trade war fears hinder new buying from China.

On Monday, cash premiums for soybean barges delivered to Gulf export terminals surged to a premium of 130 cents over Chicago Board of Trade November futures, reflecting high demand for immediate supplies. In contrast, soybeans scheduled for loading next month were priced 27 cents per bushel lower, equating to a savings of roughly $14,000 per fully loaded 1,500-ton barge.