U.S. soybean export sales have been lagging relative to the already-low export target for 2023-24, but a massive volume last week lifted the sales pace closer to the normal range.
In the week ended Nov. 9, U.S. exporters sold 3.92 million metric tons of soybeans for shipment in 2023-24, which began on Sept. 1. That is the largest-ever single-week, single-marketing-year volume, trouncing the prior high of 3.19 million tons set in September 2020.
Only two other weeks featured larger sales if combining old- and new-crop bookings, but last week’s total, which featured no 2024-25 sales, is awfully close to the combined high of 4.1 million tons set in January 2011. The other larger combined week was in February 2012.
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China accounted for 67% of last week’s net soybean sales, and unknown destinations, frequently believed to be China when it comes to soybeans, covered 18%.
Total 2023-24 U.S. soybean bookings stood at 28.2 million tons as of Nov. 9, some 59% of the U.S. Department of Agriculture’s full-year target of 47.8 million. The recent five-year average for the date is 60%, but that includes two trade-war years with China, when coverage was unusually low.
Averaging the last five years, skipping over 2018-19 and 2019-20, produces coverage of 66% by this date, suggesting 2023-24 is still behind. But in the prior week, only 51% of the 2023-24 export target had been met versus a five-year, non-trade-war average of 64%, reflecting significant progress last week.
Some traders viewed China’s recent buying flurry as a goodwill gesture ahead of a meeting this week between U.S. President Joe Biden and Chinese leader Xi Jinping, but it is interesting to note that similarly large purchases took place exactly a year ago.
Gross new soybean sales to China and unknown totaled 2.4 million tons in the week ended Nov. 10, 2022, well below last week’s 3.8 million but among the highest weeks on record. That year-ago buying caught the market by surprise.
This pattern could suggest the recent sales and the year-ago sales were routine buying for reserves and unrelated to supply fears. Top soybean exporter Brazil is having some weather issues early in its soybean season, though it may be premature to link them with China’s latest U.S. activity.
However, U.S. soybean exporters could benefit if Brazil’s problems become severe enough. The last time Brazil faced soy crop shortfalls was in early 2022. China’s U.S. soy purchases for 2021-22 became somewhat elevated in March and April 2022 as a result, but the bigger impact was on new-crop 2022-23 buying, which was heavy that January and especially in February.
In 2022, Brazil’s crop problems were concentrated in southern areas, which harvest and export later than northern areas. This year, the primary concern is over hot and dry weather in top state Mato Grosso in the center-west, where many of the first exported beans originate.
Some rain is forecast for Mato Grosso over the weekend and into next week, and many market analysts consider the realization of these rains as critical in determining the likely trajectory of the state’s crop.
However, China’s import demand is seen flat year-on-year while Brazil’s crop is pegged up 3% and Argentina’s nearly double last year’s drought disaster, which does not make the best case for U.S. soy exporters right now.
Source: Reuters (Reporting by Karen Braun,Editing by Matthew Lewis)
