By Karen Braun
FORT COLLINS, Colo., Oct 28 (Reuters) – U.S. soybean stocks at the end of next August are expected to more than double earlier predictions on a bumper crop and a summer supply shock, but some analysts think carryout could expand even further due to unimpressive export demand.
The current sales pace looks particularly bad against the anomalously strong year-ago levels, though it is certainly not the worst when considering other past years. However, the sales prospects in the coming weeks are of primary concern given top buyer China’s light interest as of late.
The United States might be China’s supplier of choice for only the next two to three months, so the window of opportunity for U.S. exporters is closing quickly. But if Chinese demand stays slow as some expect, buyers there might not mind awaiting the plentiful, cheaper Brazilian crop early next year.
U.S. soybean commitments for the 2021-22 marketing year that began on Sept. 1 totaled 30.45 million tonnes (1.12 billion bushels) as of Oct. 21. The U.S. Department of Agriculture predicts full-year exports to reach 56.9 million tonnes (2.09 billion bushels), so the latest sales total covers 54% of the peg.
That is well below last year’s 78% and above the previous two years at 39% and 38%, both battered by the trade war. Some 47% of the October forecast was covered by the same date in 2017, but the three-year average prior to that reached 64%.
China is pulling its weight when it comes to its share of total commitments, which stands at 53% as of Oct. 21. Aside from last year’s 55%, that is the highest for the date in seven years.
However, China’s cumulative sales as a percentage of the full-year U.S. forecast are unusually low at 28%. Excluding the trade war years of 2018-19 and 2019-20, only one year since 2008 featured a lower share on Oct. 21, which was 24% in 2017-18. A year ago, Chinese bookings accounted for 43% of the forecast.
It is impossible to know what volume of U.S. soybeans USDA is assuming for China, but in recent years (excluding trade war years) the Asian country has accounted for about 57% of annual U.S. bean exports.
Applying that average to USDA’s current outlook would target U.S. soybean shipments to China at about 32.3 million tonnes in 2021-22, and half of that had been sold as of Oct. 21. That is a few percentage points below the pre-trade-war average.
The slow 2017 pace deserves a closer look. As of late November, sales covered 57% of the export outlook and only 32% of bookings were to China. Outside of the trade war years, those are the lowest shares since at least 2007.
In October 2017, USDA had 2017-18 U.S. soybean exports pegged at a record 2.25 billion bushels, which is less than 1% off last year’s eventual record. The outlook was unchanged in November, but the agency made a 25 million-bushel reduction in December.
Final exports that year ended up at 2.134 billion bushels, just off the prior year’s high, though demand bulls were bailed out of overly high export outlooks as the trade war put U.S. beans on clearance for non-Chinese buyers in early-mid 2018.
Recent trends suggest the current soybean sales pace alone might not be enough to expect a pullback in the USDA outlook next month. However, if Chinese imports were trimmed, U.S. exports, not Brazilian ones, are most likely to get the shears.
Brazil’s beans for early next year are better priced than today’s U.S. product, and the growing season is off to a faster than normal start. Additionally, the industry tends to underestimate Brazil’s harvest at this stage.
(Editing by Matthew Lewis)
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