Deep discounts for Brazilian soybeans are creating an unexpected new market with U.S. processors and animal producers far upstream in the heart of the Midwest farm belt where the beans will be shipped on barges.
While light soybean imports by U.S. users along the Gulf and East Coast are not uncommon, it has been nearly two decades since South American supplies were unloaded at the Louisiana Gulf and towed up the Mississippi River to inland processors.
The current trend reverses the usual flow of barge traffic and sees ports around New Orleans which usually load ocean-going ships with beans switching to unloading arrivals onto barges.
One processor owned by CGB Enterprises Inc in Mount Vernon, Indiana, on the lower Ohio River paid 30-35 cents per bushel above Chicago Board of Trade soybean futures for more than 10 barges (about 14,000 tonnes) of Brazilian soybeans for arrival in late May or early June, four U.S. cash sources said.
That is about 25 cents below bids from processors in the state who do not have access to the river market.
The beans were bought from Gavilon Group LLC, owned by Japanese trading house Marubeni Corp, the sources said.
"It's kind of like a fire sale at a furniture store ... once that's gone, it's back to normal price," a soy buyer at an Indiana processor said.
Cargoes of Brazilian soybeans that were originally bound for China have been offered at steep discounts as the world's top importer cancelled or defaulted on purchases.
U.S. traders have been taking advantage of these prices to buy as much as 1.2 million tonnes of Brazilian soybeans.
Archer Daniels Midland Co was expected to eventually ship much of the soybeans from a 62,000-tonne vessel loading this week in Brazil up the Mississippi River to a processor in Quincy, Illinois, while Bunge Ltd was likely to crush Brazilian beans at its processors in Destrehan, Louisiana, and Decatur, Alabama, according to the cash sources.
Shipping data available to Reuters showed that a Marubeni vessel carrying 60,000 tonnes of beans was scheduled to arrive on Thursday in Mobile, Alabama, while Noble Group, majority-owned by China state trader COFCO, had ordered a vessel of 30,000 tonnes of soybeans, loading at Brazil's Ilheus port, bound for the United States.
The companies declined to comment on trading activities. The cash sources declined to speak for attribution because of competitive interests.
Total imports of soybeans to the United States on the books are near the record forecast of 1.77 million tonnes in the 2013/14 marketing season from the U.S. Agriculture Department but supplies are still expected to shrink to just two weeks' worth by the end of summer.
Soyoil produced from the Brazilian beans is unlikely to be used for biofuel as it would disqualify fuel makers from being eligible for the sellable biofuel credits known as RINs.
Imports are coming from Canada, too. Through the first three months of the year, a record 202,000 tonnes crossed the border into the United States, U.S. Census Bureau data showed.
"We need the imports," said Ronnie Edge, marketing manager at Kentucky's Owensboro Grain Co. "We're getting beans from Illinois and St. Paul (Minnesota) already. We're OK to take Canadian beans but haven't bought any."
(By Michael Hirtzer; Additional reporting by Karl Plume in Chicago; editing by Matthew Lewis)