Fundamentally Speaking

With China having purchased close to 3.0 million tonnes (mmt) over the past week and adverse weather threatening the Brazilian crop even at this early stage of the growing season can understand why the USDA left its 2023/24 soybean export projection unchanged at 1.755 billion bushels (bb) which is well below the year ago figure of 1.992 bb.

USDA may have been given a little more wiggle room by the fact that in a bit of a surprise, the soybean yield was raised by 0.3 from last month to 49.9 bushels per acre (bpa) vs the average trade estimate to be unchanged as this yield increase added 25 million bushels (mb) to production to 4.129 bb.

We had thought that any cut in yield was likely to be matched by a lower overseas sales projection to keep ending stocks near the "pipeline" level of 220 mb or thereabouts.

Nonetheless the current sales pace still suggests cut in this year's export projection down the road as current sales through this week's weekly export sales and shipment reports shows total cumulative sales down 26.4% vs year ago levels vs the current USDA projection of an 11.9% decline.

This chart shows U.S. export sales and shipments of soybeans in million bushels as of the first week of November on the left-hand axis and those figures as a percent of the USDA's November WASDE export projection on the right-hand axis.

We also report in the figures in blue rectangles the percent change in exports from the November WASDE projection to the final USDA estimate.

Current sales of 890.7 mb are the fourth lowest for this point in the season since the 2008/09 marketing year with sales from 2018-2020 pressured by the Trump trade wars with China and the drought-reduced crop back in the 2011/12 season.

This is just 50.8% of the November WASDE projection, the third lowest in that regard since the 2007/08 season.

The 440.6 mb shipped as of the first week of November is the third lowest since the 2013/14 season at 25.1% of the 1.755 bb export projection and this is linked to the slow sales pace and the difficulty in getting beans that had already been sold shipped given the low water level problems on the Mississippi River earlier in the fall.

Note also recent years where if sales as of the first week of November are below 52% of that month's WASDE projection likely final figure will be lower.

(c) Copyright 2023 DTN, LLC. All rights reserved.