Fundamentally Speaking

Was USDA Right to Cut Soybean Exports?

Joel Karlin
By  Joel Karlin , DTN Contributing Analyst

Based on the slow pace of sales season to date and increased competitor supplies the USDA in its October WASDE report lowered projected 2015/16 soybean export sales by 50 million bushels to 1.675 billion.

This is down quite a bit from the 1.843 billion bushels sold the prior year with the 9.1% fall the largest year to year decline on a percentage basis since the 2005/06 season.

Is this most recent reduction sufficient or will the enormous South American stockpiles and dramatic slowing of the Chinese economy result in additional downward revisions in subsequent S&D reports?

Similar to an earlier piece we did on corn, the accompanying graphic shows U.S. soybean export sales as of the fifth week of the marketing year (beginning Sep 1) as a percent of the October WASDE export projection and that is plotted on the right hand axis.

On the left hand axis is that October WASDE soybean export projection as a percent of the final export figure for that marketing year.

Through the fifth week of this marketing year total corn export sales are 806.0 million bushels, down 26.3% from the year ago figure of 1.093 billion bushels and the lowest total in four years.

With the USDA export forecast now at 1.675 billion bushels means the cumulative export sales figure is 48.1% of the October WASDE projection which is the lowest sales as a percent of the October WASDE in four years.

Even though the marketing year is still young we were curious what a slow start to sales meant in terms of final export projections.

The evidence is mixed for the last time the early sales pace through the fifth week of the marketing year was this low was in the 20111/12 season when they were 44.9% yet final soybean sales were only 10 million bushels below the October WASDE estimate.

Going back a little further both in the 2007/08 and 2008/09 seasons export sales through the fifth week of the marketing season were only 39% of the October WASDE projection yet final sales turned out to be 20% above that month's forecast.

(KA)

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