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Weekly Export Sales: Two scenarios for China

What do the latest export trends reveal for the world’s largest soybean importer?

After poring over the latest round of export data from USDA, out Thursday morning, Farm Futures senior grain market analyst targeted one number in particular – 5,880 net bushels. That was the slender total of soybeans the U.S. exported to China for the week ending April 11.

“That suggests one of two things,” Knorr says. “Either China is playing hardball with soybeans – waiting for a trade deal to be finalized – or demand is likely to stay muted even if an agreement can be hammered out.”

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With removal of tariffs a sticking point in the negotiations, buyers may be reluctant to make new purchases without knowing if the 25% tariff will stay in place, he adds.

“China still has 274 million bushels of unshipped sales on the books, made after negotiations started in earnest again in December,” he says. “That may be enough to satisfy demand from processors being crushed by very poor margins. Soybean meal prices are trading near contract lows, even though inventories at ports are low, an indication of the impact African swine fever is having on demand for feed ingredients.”

In total last week, U.S. soybean exports found 14.0 million bushels in old crop sales plus another 800,000 bushels in new crop sales. That tally of 14.8 million bushels was better than the prior week’s 10.3 million bushels but still below trade estimates of 22.1 million bushels. The weekly rate needed to match USDA forecasts remains at a manageable 12.4 million bushels.

Soybean export shipments last week reached 36.0 million bushels. For the 2018/19 marketing year, China still leads all destinations for U.S. soybean export commitments, accounting for 29% of the total. Other top destinations include the European Union (15%), Mexico (11%), Egypt (5%), Japan (5%) and unknown destinations (5%).

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Corn exports found 37.3 million bushels in old crop sales last week, plus another 700,000 bushels in new crop sales for a total of 38.0 million bushels. That was much improved over the prior week’s tally of 21.6 million bushels and ahead of the average trade guess of 28.5 million bushels. The weekly rate needed to pace USDA forecasts moved slightly lower, to 27.0 million bushels.

“Corn numbers were the pleasant surprises of today’s report, easily beating the rate needed to reach USDA’s forecast for the 2018 marketing year,” Knorr says. “Still, competition is significant with only one of South Korea’s recent cargoes showing up despite heavy buying last week.”

Corn export shipments were for 39.7 million bushels last week. For the 2018/19 marketing year, Mexico leads all destinations after accounting for 32% of the total. Other top destinations include Japan (22%), Colombia (8%) and South Korea (8%).

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Wheat exports landed 11.7 million bushels in old crop sales, plus another 8.4 million bushels in new crop sales, for a total of 20.0 million bushels. That was a slight improvement over the prior week’s tally of 17.4 million bushels and slightly ahead of the average trade guess of 19.3 million bushels. The weekly rate needed to match USDA forecasts for old crop sales is now just 3.5 million bushels.

Wheat export shipments reached 15.8 million bushels last week. Mexico and the Philippines are the top two destinations for U.S. wheat export commitments in 2018/19, accounting for 12% of the total each. Other leading destinations include Japan (11%), South Korea (6%), Nigeria (6%) and Indonesia (5%).

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