The US is suffering an “acute lag” in soybean export demand thanks to strengthened competition from Brazil, Washington officials admitted – but highlighted a boost to soymeal shipments from Argentine farmer crop stockpiling.
The US Department of Agriculture, expanding on a decision on Friday to cut by 1.8m tonnes to 58.8m tonnes (2.1 bn bushels) its forecast for US soybean exports in 2017-18, underlined the country’s loss of share in shipments to China, the top importer of the oilseed.
“Most of” the a lag in US exports of 77m bushels in the September-to-November period, and a further decline in December, “can be accredited to sluggish trade with China”, the ministry said, while noting that Brazilian supplies were picking up market share.
“Export competition from Brazil has persisted,” with the South American country’s soybean shipments to China swelling “four-fold”, by 4.5m tonnes (167m bushels) in the October-to-December period.
Typically, US supplies hold sway in export markets during this period, with Brazilian supplies diminished in the run up to harvest, early in the calendar year. However, this time, Brazilian stocks have been sustained thanks to a record 114.2m-tonne harvest last season.
The comments come at a time of enhanced investor focus on US soybean exports, which in terms of total commitments – that is, orders and fulfilled shipments combined – total 41.45m tonnes so far this season, on USDA expectations, down 14.2% year on year.
Overall, in consumption terms, “growth in the domestic use of soybeans is being more than offset by an acute lag in export demand”, the USDA said, although foreseeing some scope for a recovery in shipment volumes later in the season.
The department said that its forecast for US soybean shipments falling by a relatively modest 370,000 tonnes year on year implied “a larger-than-usual percentage of exports in the season’s second half”, which begins in March.
Nonetheless, it acknowledged that “the current shortfall in US outstanding export sales commitments does not portend an imminent resurgence in soybean shipments”.
‘Farm deliveries have also been slowed’
By contrast, South America is giving a boost to US exports of soymeal – with soyoil, one of the two main soybean processing products – through a squeeze on supplies of soybeans for processing in Argentina.
Argentina, the top soymeal exporter, has seen as “more subdued” pace of shipments because its processors have “had difficulty” obtaining soybeans from farmers keeping hold of their stocks as long as they can in an effort to exploit a gradual decline in export taxes.
The government is cutting soybean export taxes by 0.5 points over the two years to December 2019, giving an incentive for producers to hang on until a later date, when more of the value of shipments will flow to them, rather than to state coffers.
“Farm deliveries have also been slowed by recent depreciation of the peso”.
‘Tight domestic market’
The Argentine currency has since the start of December lost 8% of its value against the dollar, “with a corresponding rally in Argentine soybean prices leading farmers to postpone sales”.
For soyoil, however, the USDA flagged “less robust” demand for US exports despite Argentina’s soybean squeeze, with ample supplies of rival palm oil on world markets, and stronger domestic use for making biodiesel.
“A tight [US] domestic market for soyoil could linger.”
The comments come the day after the Nopa oilseed processers’ association unveiled data showing a record December soybean crush in the US, of 166.4m bushels, 1.0m bushels above trade expectations.
US soymeal exports last month came in at 926,200 short tons, up 30,000 short tons month on month, although below the 949,600 short tons recorded for December 2016.
US soyoil stocks, at 1.54bn pounds, were 157m pounds above trade forecasts, up by 212m pounds month on month, and by 105m pounds year on year - and a figure viewed as spurring a 1.0% decline in Chicago soyoil futures on Tuesday.