Linked In
News In
Linked In

You are viewing your 1 complimentary article.

Register now to receive full access.

Already registered?

Login | Join us now

South America woes to boost US corn, soy exports - Bunge

Twitter Linkedin eCard

Bunge reassured over US corn and soybean complex exports, citing depressed competition from South American rivals, foreseeing a "quite excellent" period for North American oilseed crushing margins.

Soren Schroder, the chief executive of Bunge, said that "for the next six months at least, the US is the game in town" on corn exports, albeit with competition from Ukraine, the top shipper of the grain outside the Americas.

"Whatever corn is exported, it is really a US or Ukrainian affair," he said, terming South America as "sold out".

"You will not see this as a negative in the upcoming US [export] campaign. You will see strong corn exports."

'So optimistic about US exports'

Meanwhile, in the soybean complex, Mr Schroder forecast a "very strong pull" on US exports, thanks to reduced availabilities from South America, including Argentina, the top shipper of soymeal and soyoil.

"The pace of [oilseeds] crush in Argentina for the balance of the year is likely to be lower than what we had initially expected," Mr Soren told investors.

"And that is one of the reasons why we're so optimistic about the US exports season again picking up the slack," boosting prospects for margins for North American oilseeds processors too.

He added: "We really do expect that the September/October through February period in the North American crush to be quite excellent as a result of that."

"The US should have a very good crushing season."

'Mediocre at best'

The comments come amid disappointment at latest weekly data on US Department of Agriculture crop export sales, which were blamed for a retreat in corn and soybean sales in the last session.

In soybeans, "with trade looking for record large sales for 2016-17, the pace to date is disappointing, running just above last year but well below the 2013-14 and 2014-15 pace," said Minneapolis-based broker Benson Quinn Commodities.

"Export sales data was mediocre at best," said Joe Lardy at CHS Hedging, noting that for corn, combined sales for 2015-16 and 2016-17 of some 915,000 tonnes "were the second lowest of the past 12 weeks".

'Subdued pricing'

However, South American competition was being undermined by, in Brazil, a reluctance by farmers to sell, besides a run-down in corn supplies, thanks to an overenthusiastic export campaign last year and a weak safrinha harvest now in its latter stages.

While saying that the July-to-September quarter is "typically a big quarter for farmer pricing", it was "rather uncertain how that plays out this year," given the dent to Brazilian crop values from both a stronger real and weaker values in Chicago, the world's benchmark market.

"Given the strength of real and the sell-off in Chicago… we do expect that pricing from the Brazilian farmer will remain subdued.

"There will be some, but it will be less than last year."

'Incentive for farmers to hold beans'

In Argentina, meanwhile, "it looks right now, farmers are holding onto their commodities, soybeans in particular, more so than we would have expected," Mr Schroder said.

He cited in particular the disincentive for soybean sales from the prospect of a further reduction in export taxes, which would imply more cash flowing into producers' hands.

"Timing is a bit uncertain. But it's enough of an incentive for the farmer to hold onto his beans."

Bunge is forecasting that farmers will "carry over about the same amount of soybeans into next new crop as they did this year", defying earlier market expectations of a rundown in inventories built up during Argentina's previous, less farm friendly regime.

Tax rumours

Mr Schroder cautioned that there was the potential for selling by Argentine farmers to pick up later in 2016 as they raise cash for paying for seedings of the next corn and soybean crops.

"We could see a second flurry of farmer pricing," he said - a trend which could be enhanced if the government ditches its plans for a 5-point cut, to 25%, in its soybean export tax, as some rumours suggest.

However, Mr Schroder downplayed the potential for a u-turn by the Argentine government on this pledge.

"That was, I think, one of the campaign promises. They are sticking to that."

By Mike Verdin

Twitter Linkedin eCard
Related Stories

Lean hog futures tumble - but it's not all China's fault

Beijing’s threat to impose a 25% tariff on imports of US pork is hardly bullish news for hogs. But it is not the only factor explaining tumbling prices

Chinese ag shares rise as Beijing threatens tariffs on $3bn in imports from US

... with the likes of US pork, fruit and ethanol in Beijing’s firing line. Still, not all shares in Chinese ag-related groups gain. Beingmate, WH Group tumble

Weekly grains and oilseed market view from Europe, March 23

Wet weather slows spring sowings... are EU grain supplies as big as data suggest?... support to wheat prices from rises in Russian values...

Morning markets: Soybean prices hold, even as China-US trade tensions grow

Still, what of rising soybean prices in China itself - where sugar import data show how import levies can affect trade? US wheat futures extend their recovery
Home | About | RSS | Commodities | Companies | Markets | Legal disclaimer | Privacy policy | Contact

Our Brands: Comtell | Feedinfo | FGInsight

© 2017 and Agrimoney are trademarks of Agrimoney Ltd
Agrimoney is part of AgriBriefing Ltd
Agrimoney Ltd is registered in England & Wales. Registered number: 09239069