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.

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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.


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