Investors backing soybeans on the La Nina bet need to be aware of a big potential stumbling block for prices too.
Sure, the La Nina poses a big risk to crops, with its history of causing dryness in Argentina and southern Brazil.
But a slow pace of shipments from the US suggests that the country’s exports will not come close to 61.2m-tonne record the US Department of Agriculture has forecast for 2017-18, meaning extra supplies to throw at a South American shortfall than had been pencilled in.
On a year-on-year comparison, the extent of the slowdown looks severe.
On total commitments - that is, forward sales and fulfilled exports combined – the US is running 18% behind the pace of last season, when shipments totalled 59.2m tonnes.
On that score, US exports are on course to hit fall short of 49m tonnes in 2017-18.
Sure, many observers prefer looking at the USDA export data only, which are running a slightly less severe 12.5% short of year ago levels.
Even so, that implies a figure of less than 53m tonnes for the whole of this season.
Nor were Tuesday’s Census Bureau data for October any more encouraging, hitting 9.44m tonnes – a drop of 16% year on year, and coming in below the USDA’s own data for the month.
There is good reason to think that the extent of the slowdown to 2017-18 for US exports will not set the benchmark for the full season.
Early-season shipments this season were disrupted by logistical hiccups prompted by hurricanes, and to barge traffic from the Midwest hampered first by too little water in rivers such as the Ohio, and then by too much.
By contrast, 2016-17 shipments received an early boost from a dearth of supplies for export from top rival Brazil, skewing somewhat the pattern of trade.
Still, it is easy to see too why many commentators expect the USDA on Monday, in its monthly Wasde report on world crop supply and demand, to cut its forecast for US exports this season from 61.2m tonnes, equivalent to 2.25bn bushels.
As to how much the change might be, Chicago broker Futures International, for instance, says that “if aggressive, the USDA could take it 50m bushels lower, and partially offset that reduction by taking the crush up 10m bushels”.
The result could be an upgrade to 465m bushels in the estimate for US soybean inventories at the close of 2017-18 – with extra stocks boding ill for prices.
And Futures International forecast the potential, if US exports remain disappointing, for end-2017-18 stocks to end up at 525m bushels.
That is “unless South American soybean production falls short of expectations”, or Chinese imports beat expectations, factors which remain a little more difficult to foresee at the moment.