CHICAGO (Reuters) - (The opinions expressed here are those of the author, a market analyst for Reuters.)
The market is closely watching U.S. soybean exports to see whether the 2017-18 campaign will stumble amid record global supply, and October’s data raises a red flag.
U.S. corn and wheat demand is also staring down a global supply glut and stiff international competition, and October export volumes were some of the smallest in recent decades.
The United States shipped 9.44 million tonnes (347 million bushels) of soybeans during October, according to data published Tuesday by the U.S. Census Bureau. This is down 16 percent from the year-ago record and 6 percent below October 2015’s mark. (reut.rs/2A8DLTD)
In the first two months of the 2017-18 marketing year that began on Sept. 1, soybean exports totaled 14.1 million tonnes (517 million bushels), which is 6 percent smaller than in the same period last year.
However, the U.S. Department of Agriculture expects the United States to ship 3 percent more soybeans this year than last year. Some analysts doubt whether this is possible given the less-than-impressive results during the busiest time of year for U.S. soybean merchants.
USDA will have a chance to update its 2.25 billion-bushel export target in its monthly supply and demand report on Dec. 12. The agency has not yet reduced its 2017-18 forecast since the initial estimate in May.
USDA’s weekly port inspections implied that September bean shipments were 12 percent larger than in 2016. But by the end of October, year-to-date inspections were down 9 percent on the year.
This gap has widened even further through the end of November, and soybean inspections in the first quarter were 12.5 percent smaller than in the same period a year ago. (reut.rs/2A9gFwc)
Soybean bookings have been behind the year-ago pace from the start, though the margin has opened up in the latest weeks. Through Nov. 23, year-to-date sales lagged last year by 17.5 percent – slightly larger than the 15 percent gap that prevailed in October. (reut.rs/2Ayd33E)
While the United States struggles to keep up with expectations, its rival Brazil has been setting soybean export records.
Brazil leads global soybean trade, but its export activity is usually very low during the peak U.S. shipping season – September through February – since its bean crop is still in the ground.
The South American country might be stealing a sliver of U.S. business, though. Brazil exported 8.9 million tonnes (327 million bushels) of soybeans from September through November, some 15 percent larger than 2015’s record and triple the decade-ago levels.
In October, Brazil accounted for one-fifth of the combined U.S. and Brazilian exports, though this share has recently averaged around 14 percent. (reut.rs/2AxmzE2)
Brazil has set new all-time highs for soybean shipments during seven of the first 11 months of 2017.
Another number to watch next week in USDA’s report is its forecast for U.S. corn exports, which the agency somewhat inexplicably raised to 1.925 billion bushels last month from 1.85 billion. The new number represents a 16 percent decline on the year.
Total corn inspections so far in 2017-18 are down 43 percent on the year, but this might be expected. Last year was heavily front-loaded since the U.S. product was the most logical replacement for the drought-damaged Brazilian crop.
But total corn commitments to date are down 27 percent, and October’s volume of 2.73 million tonnes (107 million bushels) is among the month’s smallest on record. (reut.rs/2kpBGLR)
A bumper wheat harvest and cheap prices in top exporter Russia have dampened the outlook for other wheat suppliers, and the effect is palpable in the United States.
U.S. wheat exports totaled 1.38 million tonnes in October. Aside from the 1.22 million in October 2015, this year’s volume is the lowest for that month since the early 1970s.
The United States exported 1.72 million tonnes of wheat in October 2016.
USDA predicts current-year wheat exports to fall 5 percent from last year’s levels. Shipments are down only 2.5 percent through the first five months of 2017-18, but the pace has tapered off. (reut.rs/2AxZC3y)
Editing by Matthew Lewis