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UPDATE 1-Weak U.S. soy export sales fuel fears of demand slowdown
January 6, 2017 / 8:39 PM / 8 months ago

UPDATE 1-Weak U.S. soy export sales fuel fears of demand slowdown

(Recasts throughout; adds details, quotes)

CHICAGO, Jan 6 (Reuters) - U.S. soybean export sales slid to their lowest in the current marketing year last week, the U.S. Department of Agriculture said on Friday, fueling concerns among analysts and traders that formerly sizzling demand is cooling down.

Exporters in the week ended Dec. 29 struck deals to sell 87,500 tonnes of U.S. soybeans for delivery in the 2016/2017 marketing year, which ends on Sept. 1, according to the USDA. That was down 94 percent from the prior four-week average.

Corn export sales were also a marketing-year low.

Traders had expected soybean sales would reach 800,000 to 1.2 million tonnes and said that U.S. prices remained competitive on the global market. Still, soybean futures fell 1.7 percent on concerns about a slowdown linked to increased competition for business from South America and strong sales earlier in the year.

"While holiday timings should suppress trade, an 88,000 metric tonne weekly sales total was eye opening," said Terry Linn, executive vice president for broker Linn Group in Chicago. "It was an ominous reminder to the trade that our export program is on a clock."

Some traders cautioned that more than one week of poor sales was needed to draw conclusions about dwindling U.S. sales by global traders, such as Bunge Ltd, Archer Daniels Midland Co and Cargill Inc.

However, others said the United States was grappling earlier than usual with a seasonal shift of export demand to Argentina and Brazil.

Last week's U.S. sales were "a solid indicator that South America is taking control of the world export market," said Karl Setzer, risk management team leader with MaxYield Cooperative in Iowa.

"Bookings will be much less than what we have become accustomed to seeing," he added.

Large sales of U.S. soybeans earlier in the marketing year indicate that demand was front loaded and the latest sales could be the start of a slowdown, analysts said.

On Friday, the USDA changed destinations for more than 850,000 tonnes of U.S. soybeans that had been previously sold and earmarked for unnamed buyers. Top importer China took 626,000 tonnes switched from "unknown destinations."

Overall, exporters have yet to ship 5.1 million tonnes of U.S. soybeans already sold in the current marketing year to unnamed buyers, up 34 percent from a year ago. That means importers could continue to turn to soybeans labeled for "unknown destinations," instead of making new purchases.

"We're going to see an increasing amount of this phenomenon where importers are working off of old contracts," said Ken Morrison, publisher of a commodity newsletter in St. Louis. "They have less of a need to make purchases from the U.S." (Reporting by Tom Polansek, Julie Ingwersen and Mark Weinraub; Editing by Dan Grebler and Lisa Shumaker)

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