Two recent DTN pieces point to the challenges faced in the global soybean market and spell opportunity for Canadian growers.
The first piece, written by DTN Grains Analyst Todd Hultman, is titled "Soybean Shorts Beware" (http://bit.ly/…). In it, he discusses the logic of a soybean rally in harvest time following the release of the latest USDA report, which reduced U.S. ending stocks to 430 million bushels in 2017/18, which is 43% higher than estimated for the 2016/17 crop year.
At the same time, he points to USDA's data, which shows 83% of total global exports forecast are expected to come from either the U.S. or Brazil, which relies heavily on both countries producing a big crop. Despite a big U.S. carryout, current USDA estimates point to the potential for a 5 million metric ton carryout in Brazil for 2016/17, reported as of Jan. 31, 2018, while falling to just 2.4 mmt a year later for the 2017/18 crop. These are razor-sharp levels and are based on Brazil's ability to pull off another monster crop of 107 mmt given current demand projections. It is easy to see how planting dates and week-to-week weather have become as important as they are.
The second piece (http://bit.ly/…) was written by Lin Tan, who is DTN's China correspondent. Lin reports that while China is expected to import 95 mmt of soybeans in 2017/18, this volume is expected to grow to 110 mmt in just five years, which may test global export channels.
USDA's 2017/18 estimates indicate Canada's estimated exports at 5.8 mmt, which are competing for the 17% of the global share not covered by exports from Brazil or the U.S. Estimated exports from Canada, Argentina, Paraguay and Other is estimated to total 25.7 mmt, as seen in the Oilseeds: World Markets and Trade report for October.
The brown line on the accompanying chart shows Canada's share of global export volumes, which range from a steady 3% to 3.2% in 2013/14 to 2016/17, according to USDA. Despite a jump in global demand forecast for 2017/18, current estimates point to Canada's share jumping to 3.8% this crop year to 5.8 mmt, while AAFC's target is 6 mmt. The expected growth in this demand could lead to significant export opportunities ahead for Canadian producers.
The blue bars on the chart show the trend in producer deliveries as of week 10 into licensed handling facilities in the west. The 2013/14 crop year represented the first year that the Canadian Grain Commission reported on soybeans, while week 10 deliveries in the current crop year, or the week ending Oct. 8, shows 528,400 metric tons delivered into licensed facilities, which is more than six times what it was just four years ago as soybeans become an increasingly important cash crop.
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