December 6, 2019 / 10:24 AM / 6 months ago

Column: U.S. soy exports hit nearly two-year high on larger volumes to China

CHICAGO (Reuters) - So far, the U.S. 2019-20 soybean shipping season is going much better than last year’s effort thanks to more involvement from China in the U.S. market.

Soybeans are harvested from a field on Hodgen Farm in Roachdale, Indiana, U.S. November 8, 2019. REUTERS/Bryan Woolston

But China’s interest in the U.S. oilseed is roughly half as strong as it had been in prior years because of the ongoing trade war and reduced domestic demand.

China’s exact bean needs remain uncertain, as do its intentions about buying the U.S. product going forward, especially with the big volumes out of Brazil as of late and a potential record crop on deck there for early 2020.

The United States exported 5.94 million tonnes of soybeans in October, according to data published Thursday by the U.S. Census Bureau. That is the highest monthly volume since December 2017 and is 9% higher than in October 2018.

The October soybean total was substantially lower than in the four prior Octobers, however, when shipments averaged 9.95 million tonnes. About three-quarters of those beans were destined for China, but only 30% of the October 2019 shipments – some 1.76 million tonnes – headed there.

November soy exports were much healthier, and that was driven by large Chinese shipments. Weekly export inspections data from the U.S. Department of Agriculture suggest total November loadings may have hit 6.9 million tonnes, with up to 65% of that headed to China. If true, that would be the highest monthly total and largest share to China in exactly two years.

But looking ahead, the 2019-20 shipping schedule is not so full. USDA data shows that as of Nov. 28, unshipped soybean commitments totaled 9.96 million tonnes, less than last year’s 10.98 million, which was unusually low as China was largely inactive.

China is the critical piece in boosting U.S. soybean exports, but sales slowed in the latest week. USDA data on Thursday showed net export sales to China in the week ended Nov. 28 at 298,617 tonnes, the smallest purchase since mid-October.

However, there was a flash sale on Thursday of 245,000 tonnes of U.S. soybeans, with 120,000 of that for delivery in 2019-20, but the buyer was unknown.

BEANS, BRAZIL, AND CHINA

Market participants have yet to get a good handle on China’s exact demand for soybeans because of the outbreak of African swine fever that has crippled its hog herd. It is also unclear how long China’s needs will remain depressed, but imports are recovering based on recent shipment data.

Brazil exported 5.16 million tonnes of soybeans in November, a monthly record, and some 94% of those were to China. Using the U.S. estimates for November, around 9.3 million tonnes of U.S. and Brazilian beans set sail for China last month, and that would be the largest such volume since May 2018.

That presumed November volume would be nearly double that of the previous November, and up about 46% from October 2019. The United States did not ship any soybeans to China in November 2018.

Through November, combined U.S. and Brazilian shipments to China in calendar year 2019 totaled around 75.6 million tonnes, up 4% on the year but down 5% from the same period in 2017.

CORN STILL SLOW

The United States exported 2.3 million tonnes of corn in October, up 14% from September but the smallest October volume since 2012. In the first two months of the 2019-20 marketing year that began Sept. 1, corn shipments totaled 4.33 million tonnes, the slowest start in seven years and down 60% on the year.

Inspections data suggests November corn exports around 2.75 million tonnes, more than in the previous two months but smaller than in any month in the 2018-19 year.

U.S. corn sales continue to be slow, with only 14.6 million tonnes sold for 2019-20 through Nov. 28. That compares with 26.7 million in the same week a year ago and 17.4 million on the same day in 2015, the latter of which was considered an extremely slow start.

Brazilian competition has been hammering the U.S. corn export market this year, but Brazil’s November exports dropped substantially from the previous months’ records. That is a sign that exportable supplies there are starting to run low, and since Brazil exports its second-crop corn, new product will not be ready until mid-2020.

Ukraine, one of the big four corn exporters, has plenty of the grain after another bumper harvest. Ukraine’s Economy and Agriculture Ministry said on Monday that total grain exports for 2019-20, which began on July 1, are up 32% on the year. Wheat and corn were cited as the main drivers.

The U.S. 2019-20 marketing year for wheat began on June 1, and through the first five months, exports totaled 11.1 million tonnes. That is slightly higher than the five-year average for the period of 10.5 million.

November is statistically the slowest month of the year for U.S. wheat exports, but inspections imply that shipments may have hit 1.8 million tonnes last month. If realized, that would be the largest November volume in nine years.

The opinions expressed here are those of the author, a market analyst for Reuters. 

Editing by Matthew Lewis

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