Fundamentally Speaking

The U.S. has been selling China quite a few soybeans in recent weeks as the PRC is reacting to rising Brazilian FOB premiums as their harvest winds down, congestion at some of the Brazilian ports and uncertainty as to how large the U.S. crop this fall will be.

Nonetheless, the USDA did pare the new crop 2023/24 export projection by 25 mln bushels in this month's WASDE report to 1.825 billion and further cuts may be forthcoming not only for next year but even this year where the 2022/23 export projection was left unchanged at 1.980 billion bushels.

This chart shows U.S. old-crop soybeans shipped and sold as of the second week of August as a percent of the August USDA WASDE old-crop export projection on the left-hand axis. On the right hand-axis, the amount of new crop soybeans sold as of the second week of August as a percent of the August WASDE new crop soybean export projection is plotted.

The latest export sales report on August 10 showed total soybean sales this year at 1.956 billion bushels meaning only 24 million need to be sold over the next two weeks to attain the old crop target. That figure, however, is 98.8% of the August 2023 old crop WASDE projection, and that is the lowest percentage going back to 1990 for this time of year. Total commitments usually exceed the USDA August projection as some of those soybeans sold will not ship.

In fact, other than this year and in 1991, by the second week of August U.S. soybean sales normally exceed the August projection. Meanwhile, 1.881 billion have shipped, which is 95.0% of the 1.980 billion old crop projection and is actually below average.

Record Brazilian soybean production providing formidable export competition, pared U.S. supplies linked to far lower planted acreage than had been expected, and what could be another year of below-trend yields, will push U.S. soybean exports to the lowest levels since the 2018-2020 period of intense trade wars with China.

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