U.S. grain and oilseed export prospects had started to sour over the last several weeks with sales slumping, but hefty corn purchases by China and even some old-crop soybean business has somewhat rejuvenated the U.S. market.
The U.S. Department of Agriculture on Thursday made its third consecutive announcement of old-crop U.S. corn sales to China, totaling 1.92 million tonnes over three days. Corn sales to China had not flashed on consecutive days since May 2021, and the last corn flash to China before this week was in August.
The latest sales lift China’s 2022-23 bookings of U.S. corn to at least 6.5 million tonnes through Thursday, down almost 50% from the same week a year ago. China expects its 2022-23 imports at 18 million tonnes, down from nearly 22 million in the prior year.
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Crunching the numbers show there could be room for even more old-crop U.S. corn business to China, but the final tally will heavily depend on Brazil’s upcoming harvest and the future of Ukraine’s shipments.
Brazil is done shipping corn to China for now, having exported 2.2 million tonnes of corn to China between November and February, including just one cargo in February. Between October and February, Ukraine shipped 3.3 million tonnes of corn to China compared with 4.25 million in the same period a year earlier, according to Refinitiv data.
China has stayed mostly quiet on the Russia-Ukraine conflict, but it offered supportive words on Thursday for the extension of the Black Sea grain deal, possibly an indirect acknowledgment of Ukraine’s importance in China’s grain imports.
China is banking on a huge Brazilian safrinha crop, having bought at least 1.5 million tonnes for shipments starting in July. That gives China a fourth-quarter import option it did not have last year, perhaps easing needs for U.S. corn assuming Brazil’s harvest is successful and that farmers there make the necessary sales.
SOY AND SORGHUM
Brazil’s March soybean exports are set for new highs, but there may be some snags. Ships have been reportedly backing up at Brazil’s second-largest port of Paranagua due to traffic disruptions and poor weather, something port officials denied on Wednesday.
However, last week’s boost in U.S. soybean sales could offer validity to the Brazilian delay story, as U.S. bean demand usually softens as Brazil’s season ramps up. Net U.S. sales through March 9 totaled 665,048 tonnes, the largest since January and following the prior week’s net cancellation. New gross sales from China last week were also the largest since January.
But the massive Brazilian soy volumes expected to arrive over the next few months may have China less interested in U.S. beans for next year. New-crop U.S. sales to China totaled 722,000 tonnes as of last week, not overly unusual compared with other recent years but down 90% and 70%, respectively, versus the same dates in 2022 and 2021.
U.S. sorghum sales surged last week to 293,301 tonnes, the largest of the marketing year so far. China has been booking some cargoes over the last several weeks, but unknown buyers last week made their largest weekly purchase in over a year.
China is by far the primary destination for U.S. sorghum, but a terrible crop last year has USDA estimating 2022-23 exports down 70% on the year.
Source: Reuters (Writing by Karen Braun Editing by Matthew Lewis)