US farmers would have to break records to accomplish the soybean plantings they initially expected, let alone achieve the extra sowings that some investors are forecasting, officials said, citing seed supply as well as weather challenges.
The US Department of Agriculture - reporting a “record pace” of Midwest rainfall, which had doused many areas with 8-12 inches of rain last month, more than twice the average amount – underlined that the “difficult fieldwork condition” had slowed US soybean sowings to the slowest pace since 1995.
In terms of the actual area of US soybeans left unseeded, to reach the 84.6m-acre total suggested by a USDA pre-planting farmer survey in March, the total entering June stood at the highest level for that date, of a little over 51m acres.
This meant that “between June 1 and early July - when the planting window closes - farmers would have to sow an unprecedented level of soybeans to reach the March intentions,” the USDA said.
Some investors expect US growers to plant the full 84.6m acres with soybeans, and more, picking up some of the substantial area of land farmers were unable to seed with corn, which has a slightly earlier sowing window.
IEG Vantage on Thursday, while estimating that 8.0m acres of corn would go unseeded, compared with the USDA March forecast of 92.8m acres, forecast an extra 370,000 acres of soybeans.
The USDA flagged, besides “saturated soil conditions”, a potential squeeze on seed supplies as a potential restriction for growers.
“The extent of switching from corn could be constrained by the availability of additional planting seed for soybeans.”
It also flagged the “hard decisions on how to proceed with crop planting” for farmers who could either: take prevent plant insurance on corn land they were unable to seed; press on, but with tapering coverage for other insurance schemes; or switch to later-seeded crops such as soybeans.
Cancellation vs delay
The comments came in a briefing in which it highlighted the extent of Chinese orders of US soybean exports for 2018-19 which remained unfulfilled, as the end of the season, in August, looms.
“Undelivered sales to China typically account for no more than 20-30% of total outstanding sales as of early June but this year represent 57%,” USDA officials said.
It would “take a sharp acceleration of shipments” to curtail uncompleted orders to their “usual level”.
The USDA added that “while high transaction costs should discourage cancellations of favourably priced soybean sales contracts, rescheduling of contracted delivery dates for the 2019-20 marketing year might be more easily negotiated”.
The comments come amid reports that Chinese soybean buyers are indeed asking for delays to soybean shipments.
Chinese buyers have 6.34m tonnes of US soybeans on order for 2018-19 which has yet to be shipped, up from 1.45m tonnes a year ago, USDA data on Thursday showed.
The USDA separately on Friday announced the cancellation of a Chinese order of 130,000 tonnes of US soybeans, for 2018-19 delivery, but a fresh order to China of 136,000 tonnes, also for this season.