Investors should not get too downbeat over prospects for US
wheat exports, US officials said, proving some reassurance over soybean shipments too - depending on the inventory strategy being followed by Chinese soybean processors.
The US Department of Agriculture said that while the pace of
US wheat exports was indeed slowing, "this was anticipated, as exports were
expected to be frontloaded" in 2013-14.
In fact, "the slowdown has been smaller than earlier
expected," the USDA said, flagging the role of Brazil, a structural wheat
importer, in supporting US export volumes.
"Reduced competition in South America is enhancing US wheat
export prospects," with Brazil increasing its reliance on North American origin
in the absence of ready supplies from neighbours Argentina and Paraguay.
For soybeans too - in which US exporters are concerned that
the onset of the Argentine and Brazilian harvests will switch import demand south
– the USDA provided some reassurance.
"Although export sales of soybeans appear to be slowing
recently, record-large outstanding sales commitments will sustain US shipments
through the start of the South American harvest this spring," the USDA said.
However, it acknowledged that not all the record 1.5bn
bushels in outstanding soybean sales commitments, as of January 2, might actually
be shipped in 2013-14, depending on South America's crop fortunes, and on the strategy
being followed by processors in China, the top importer.
"Whether or not China's soybean importers have been
purchasing solely for current processing requirements will have a bearing on
which exporters are ultimately picked to source their supplies over the next
few months," the USDA said
"If importers in China have been building up stocks, they
might wait for a further decline in prices, which favours an eventual switch of
deliveries from the US to South America."
'Virtually shutting down
The comments follow the USDA's Wasde crop report on Friday
which raised by 20m bushels to 1.495bn bushels (40.7m tonnes) the forecast for US soybean exports in
2013-14, and by 25m bushels to 1.125bn bushels (30.6m tonnes) the forecast for
Other revisions in wheat included an upgrade by 1.0m tonnes,
to a record 26.0m tonnes, in the estimate for European Union exports, but a cut
to 500,000 tonnes to a 36-year low of 3.0m tonnes in the forecast for Argentine
shipments in 2013-14.
In Argentina, "wheat supplies are projected lower, and the government
has been virtually shutting down wheat exports since July 2013 in an attempt to
avoid high inflation and ensure an adequate level of wheat supplies," the USDA
"The government is not allowing the holders of previously-issued
export licenses to fulfil them now, and has recently blocked wheat that has
been already sold from leaving the country."
Meanwhile, neighbouring Paraguay "is struggling because of
an insufficient amount of quality wheat," following frosts in July and August
which destroyed some crops, and left much of what survived for only for feed.
"In the absence of the shipments from these two countries, Brazil
its turning mainly to the US for its milling needs."