October 27, 2009

3 Min Read

Severe harvest delays recently helped push soybean prices to their highest levels since early August, but the delays are also now spurring concern that export sales could be lost.

A continued shortage of supplies in the export market due to the slow U.S. harvest pace is likely forcing Chinese buyers to delay previously scheduled U.S. shipments.

There is concern some of that demand may migrate to China’s domestic crop and that some cargoes may be shifted to South America if the U.S. loading delays continue. Buyers could also turn to alternative oilseeds to replace some U.S. soybean shipments.

China’s Commerce Ministry on Monday projected China’s November soybean imports will come in at 2.34 million metric tons (mmt), up only slightly from a revised October import forecast of 2.13 mmt.

Earlier this fall, traders expected China’s November imports to total about 4 mmt, but now generally export imports of about 2.5 mmt.

There were reports in the market on Monday of Chinese buyers delaying delivery on three to four cargoes of U.S. soybeans due to loading delays.

Last week, some Chinese buyers also reportedly "washed out" (resold) U.S. soy cargoes in the world market because it was more profitable than importing the beans that were bought at lower prices.

Those buyers reportedly planned to replace the U.S. cargoes with domestic soybeans to take advantage of subsidies that Beijing is expected to offer.

There will be little South American competition for U.S. soybeans over the next three months, as both Brazil and Argentina were basically sold out of 2009-crop soybeans at the end of September.

However, an early start to Brazil’s planting season has contributed to market concerns that some delayed shipments could wind up being switched to South America.

Brazilian consultant Safras & Mercado estimated that 20% of Brazil’s soybean crop had been planted as of Oct. 23, ahead of the five-year average pace of 11%.

In the top soybean-planting state of Mato Grosso, where planting normally begins first, planting progress was estimated at 42%, well ahead of the average pace of 25%.

Harvest is expected to start earlier than ever before in Mato Grosso’s northern growing areas and Brazil may harvest a good deal more soybeans during January than in past years.

Producers in other areas of Mato Grosso have reportedly planted short-season soybeans to take advantage of price premiums for early delivery and get second-season corn and cotton planted earlier.

Some Brazilian soybeans could be available to the world market again by February as harvest is expected to start earlier than ever this year in Brazil’s northern growing areas.

However, pent-up demand from Brazilian processors may limit the movement of early harvested soybeans into the export pipeline, minimizing the competition for U.S. soybeans in early 2010.

"Brazil just won't have that much soy to sell on the international market at that time," says Antonio Sartori, chief trader at Brasoja in Rio Grande do Sul, the No. 3 soy state told Reuters News Service last week.

Editor’s note: Richard Brock, Corn & Soybean Digest's marketing editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.

Subscribe to receive top agriculture news
Be informed daily with these free e-newsletters

You May Also Like