Reuters – It might take some extraordinary circumstances for U.S. soybean shipments to approach the government’s full-year target.
Without an extended turnaround in export demand, U.S. soybean stockpiles could swell to the second-highest levels on record by September.
China is likely the only country that could provide the needed lift to U.S. soybeans, but given cheaper, abundant supplies in Brazil and a slower global economy in the wake of the coronavirus, the outlook is not too favourable.
The United States exported just 2.76 million tonnes of soybeans in February, the fewest for the month since 2004, according to recent data.
Very few American soybeans were shipped in February to China, which has agreed to import a record value of U.S. farm goods this year under the Phase 1 trade deal. Soy exports to China in February totalled 471,761 tonnes, down 78 per cent on the year.
The latest data brings U.S. soybean exports in the first half of 2019-20, which began on Sept. 1, to 30.5 million tonnes. That is up 13 per cent from the previous year’s lull but down 25 per cent from the 2014-18 average.
March might have been even worse for U.S. soybeans. Export inspection data published by the U.S. Department of Agriculture combined with recent trends in actual shipments put the March volume right around two million tonnes.
That would be the worst March since 1.96 million tonnes in 2013.
Inspection data also implies that fewer than 200,000 tonnes of U.S. soybeans sailed to China in March, and that is the lightest for the month since 2002. Combining February and estimated March exports to China would put that volume at the smallest since 1999.
USDA’s latest 2019-20 target for domestic soybean exports is 49.67 million tonnes or 1.825 billion bushels. That would require April-August exports near 17 million tonnes, conservatively. That would be a record for the period.
China has not made goodwill U.S. bean purchases since before the Phase 1 deal was signed back in January. And although under the gun for huge U.S. imports per the deal, Beijing plans to buy based on need and market condition, not supportive of unexpectedly large goodwill sales.
Brazil is nearly finished harvesting what is expected to be a record soybean crop, and its recent exports have been nothing short of impressive. Not only are Brazilian beans cheaper than U.S. ones, but farmers have been eager sellers.
Brazil exported a massive 11.6 million tonnes of soybeans in March, some 30 per cent more than 2017’s record for the month. That is more than the all-time monthly U.S. record of 11.2 million tonnes set in October 2016.
Between September and March, the first seven months of the U.S. marketing year, Brazil exported a record 35.8 million tonnes of soybeans, up four per cent from the previous year’s high. Some 81 per cent of those went to China, and although the actual volume is down about three per cent from last year, it is up 46 per cent from two years ago, which was record at the time.
USDA pegs Brazil’s soybean harvest at 126 million tonnes, but industry analysts have recently reduced estimates based on drought, some as low as 120 million tonnes. If Brazil’s crop comes up short, this could give a bump to U.S. soybean sales in the next couple of months, as in 2016.
Otherwise, goodwill purchases from China might be the only option left to achieve anything close to USDA’s export outlook.
Karen Braun is a Reuters market analyst. The views expressed here are her own.