Fundamentally Speaking

U.S. Soybean Export Shipments

Both soybeans and soybean meal continue to hover near contract highs though last week’s spike high suggests the possibility of a blow-off top.

Large gains earlier in the week in both spurred by the sharply higher corn and soybean trade were the first to fade as talk of negative Chinese soybean crushing margins and congested ports suggest some Chinese cancellations of U.S. soybeans purchased earlier in the year will soon occur.

Certainly that is the hope as the current U.S. balance sheet looks completely unworkable with the USDA earlier this month pegging 2013-14 ending stocks at 150 million bushels, but the surge to new highs has not yet dampened either domestic processor or foreign demand.

The export situation is problematic in that the U.S. is oversold on their overseas commitments for despite what appears to be a record, albeit falling estimate of South American production, international demand for U.S. soybeans remains relentless.

The accompanying chart shows that 106% of the USDA February WASDE export projection of 1.510 billion bushels has already been sold or 1.597 billion bushels, the highest for this point in the marketing year ever.

Total shipments as of the third week of February are 1.326 billion bushels this year meaning only 184 million bushels can ship for the rest of the year (until Aug 31) to stay within this projected level.

The problem as highlighted by the graphic is since 1986, the least amount of U.S. soybeans shipped overseas from the third week of February to the end of August has been 185 million bushels and that was back in 2003/04 when the amount of unshipped soybeans was 50% of the 271 million still needing to be shipped.

How this situation gets resolved will say quite a bit about soybean and meal price action prior to new crop considerations.



To comment, please Log In or Join our Community .

3/6/2014 | 12:07 PM CST
Hello Darin. Average shipments from the 3rd week of February to the end of the marketing year since 1986 have averaged 326 million bushels and the ten year average is 380 million. Taking out today's 43 million bushels shipped for the latest reporting week leaves 337 million bushels to be shipped on average using the last ten year's worth of data. Add that to the cumulative shipped total this year of 1.366 billion results in a projected total shipped figure of 1.703 billion bushels, 193 million above the last USDA estimate of 1.510 billion. This leaves the USDA in a real box for at most maybe 15 million bushels can be cut from the residual (resulting in a negative figure) and maybe imports can be increased 5-10 million. Fact is that crush margins remain at record high levels for this time of year suggesting the processing figure cannot be pared and even if the 2013 crop is higher than posted, that will not be changed till September 30.
3/6/2014 | 11:15 AM CST
Excellent piece as always Joel. In your discussion that sales are 106% of USDA's February projection, the highest at this time on record, I also noticed that it is the only occurence of total sales being above 100% at this point of the marketing year. In your opinion, what could this project to for export demand in 2013-2014 given average shipments over the last half of the marketing year?