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Soybean futures turn away from $13/bushel as export paces shrink

Soybean futures turn away from $13/bushel as export paces shrink
Weekly soybean exports fall by over 48%

Weekly soybean volumes weighed and/or inspected for export tumbled by nearly half for the week ending December 24, according to weekly grains inspection data released by USDA. For the December 18 – 24 reporting period, soybeans weighed at U.S. export facilities fell by a staggering 49.9 million bushels to 53.2 million bushels.

Slowing shipping paces stunned futures prices on the Chicago Board of Trade. Soybean futures had been trading up 2-4 cents in the moments following the opening bell, but USDA’s updated export loading paces stunned the market into a 6-8 cent loss.

Shipments to China led all soybean volumes for the reporting week ending December 24. Despite a slower week, Chinese-destined soybeans totaled 33.4 million bushels, or 63% of all U.S. soybeans weighed for export inspection last week.

Strong export demand following the depletion of South American soybeans late this summer provided a sturdy pillar of price support for soybean futures. But historical trends suggest U.S. soybean export volumes typically begin to decline in mid-December as top buyers await a cheaper South American crop.

And this year will be no exception if today’s report is any indication. Chicago soybean futures sat at six-and-a-half-year highs this morning prior to USDA’s report. Small Chinese soy processors have previously shown signs of buying resistance to high-priced U.S. soybeans after crush margins turned negative in late November.

The Brazilian crop, despite some drought damage, is still expected to set record production highs this year. This morning’s report shows that in the absence of Chinese demand, the large Brazilian crop will still cause significant price problems for U.S. soy producers over the next six months.

Mexico was the second-largest destination for U.S. soybeans last week, with nearly 3.6 million bushels inspected for export.

Old corn buyers, new exports

After a lackluster week of corn volumes weighed for export inspection last week, U.S. corn shipments to international buyers rebounded in today’s export inspections report from USDA. For the week ending December 24, U.S. corn volumes weighed for export rose by 29%, or 8.8 million bushels, to 39.1 million bushels.

While corn shipments to China led all destinations for U.S. corn last week at 14.5 million bushels, a few more familiar faces took advantage of a week dollar. Nearly 7.7 million bushels of U.S. corn were shipped to Mexico and 6.6 million bushels were sent to Japan. Both countries traditionally vie for the top destination for U.S. corn. But four months into the 2020/21 marketing year has found both countries 4.4% behind corn loading paces compared to the same time a year ago.

Wheat falls, but remains strong

Loading paces for wheat were largely smaller due to fewer sales shipped to China for the week ending December 24. U.S. wheat volumes inspected for export fell 3.2 million bushels, or 22.5%, to 11.2 million bushels for the week.

It was a slow week for U.S. wheat buyers, as shipments to China dipped to 2.5 million bushels. The Philippines were the top destination for U.S. wheat, with 3.9 million bushels shipped to the Southeast Asian country between December 18 – 24. Mexico followed close behind, with 3.0 million bushels of U.S. wheat destined for our neighbors to the South last week.

But despite the downturn in weekly export loading volumes, the future of U.S. wheat exports remains optimistic. Loading paces are currently in line with USDA’s updated 2020/21 export projection of 985 million bushels as marketing year to date wheat exports soar 8.3% higher than the five-year average.

Plus, a looming export quota and tax on Russian wheat exports will likely push out smaller buyers that rely on the Black Sea for affordable feedstocks. U.S. wheat exports usually gain seasonal momentum by late January but dwindling Russian supplies could entice international buyers to America’s shores for wheat sooner, especially if the dollar remains at multi-year lows.

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