Last month, the US Department of Agriculture made a substantial 65 million-bushel cut to 2017/18 US soyabean exports. The new projection of 2.16 billion bushels, if realized, would be down fractionally from last year's 2.174 billion bushels. But the agency probably needs to continue the downward momentum for US soya exports in its monthly supply and demand update due Thursday at noon EST (1700 GMT).
Through the first four months of the 2017/18 marketing year that began on Sept. 1, total shipments are down 11 percent from the previous year, not fractionally as USDA's forecast suggests. Kicking out September, which featured record monthly exports on the tail end of China's summer buying spree, the October-through-December volume was the smallest in four years, and these are typically the United States' busiest months for soya shipments.
Market analysts appear to be in the smaller-exports camp, at least when it comes to expectations for Thursday's report. The US soyabean harvest was finalized in January and crush has been very strong, so only a decrease in exports could explain why the trade is looking for a rise in US soyabean ending stocks to 486 million bushels from 470 million.
The 2017 US soyabean crop may be lacking in protein content relative to the previous couple of years, and this could be causing the slowdown in business. And No. 1 exporter Brazil is more than happy to pick up the slack. In the October-through-December period, Brazil shipped 6.99 million tonnes of soyabeans, some 46 percent more than its previous record for that time frame. Brazilian shippers continued the trend into January, setting yet another monthly record.
These months generally represent the "down" time for the country's soya exports in favour of corn, so Brazil's recent bean volumes pale in comparison to those out of the United States. But it is the South American country's share of the total exports that should alarm US sellers. In September through December, the first four months of the 2017/18 US soyabean marketing year, Brazil accounted for 28 percent of the two countries' combined exports. This compares with 9 percent a year earlier and is Brazil's highest share for the period since 2011, a year in which the US crop struggled. The five-year average is about 15 percent.
But aside from the quality issues with the latest US soyabean harvest, domestic supply is not lacking and in fact swelled to an all-time high on Dec. 1. So with plenty of beans, low prices, a lofty export forecast but lagging progress, when exactly does USDA expect the United States to fulfill this target, if the peak shipment months have already passed? One possible answer is "right away," at least looking at crop progress in Brazil's southern state of Parana, the country's No. 2 producer of both soyabeans and corn.
As of Feb. 5, no soyabeans were reported as harvested in Parana, but the average for the date is about 19 percent. The state is home to the major port of Paranagua, which means the exportable supply at that port might be lacking and buyers may have to wait longer or look elsewhere. Additionally, port supplies may have been affected over the past several days by a severe traffic jam on BR-163, a road that carries soyabeans from top producer Mato Grosso to ports in the north. Logistical nightmares are common for this partially unpaved roadway, so it is unlikely to be too worrisome without overly wet weather.
But if these factors were to translate to a pickup in business for the United States, it would have to be accompanied by an immediate boost in weekly export sales and port inspections - and those two categories have not been particularly impressive as of late.