The George Costanza character on the Seinfield TV show was famous for saying he wanted to "leave on a high note." The same may be true of Chinese purchases of U.S. soybeans, which showed signs of tapering off after a huge push towards the end of 2012.
The big story in the export market at the end of the year was the record pace of Chinese soybean buying, especially from the U.S. Chinese imports in December were close to an all-time record, bringing purchases for the calendar year up11.2% from 2011.
But traders expecting that strong pace to continue were disappointed today by the first weekly export sales totals of 2013. Net new bookings by China actually were negative, as buyers cancelled prices made at higher prices.
China continues to ship out most of those previous deals at a furious pace ahead of Lunar New Year holidays. Total U.S. shipments reached 43.2 million bushels last week, twice the rate forecast by USDA for the marketing year. That record level is keeping basis strong, with a 34-cent premium noted between January and March futures this week.
But if Chinese buying is shifting towards South America, a continued drop off in new bookings would suggest total Chinese demand for the 2012 crop may not be bigger than current forecasts. Indeed, weekly sales would have to top 11 million bushels through February to confirm an increase over current forecasts.
Our projection makes it unlikely USDA will increase its forecast of exports in Friday's supply and demand update. Still, news out after today's report shows Chinese demand isn't going away quietly. USDA announced the sale of 21.6 million bushels of soybeans today under its separate daily system for reporting large purchases. The agency said 10.3 million bushels were for 2012 crop to unknown destinations, while China took another 2.2 million bushels of old crop and 4.4 million bushels for 2013 delivery. China booked another 4.6 million bushels of 2013 crop of optional origin as well.
The news helped turn nearby beans higher after a move lower following the weekly totals. Corn prices also reversed higher despite another disappointing week of sales. Net new bookings were just 1 million bushels. Shipments of 4.2 million bushels, a marketing year low, suggest USDA is likely to cut its forecast for the 2012 crop marketing year in Friday's report. If current trends continue, sales could be an all-time low, falling to just 1 billion bushels, though the agency may not go that low in Friday's forecast.
Wheat sales were also disappointing at just 8.6 million bushels, with most buyers taking only small amounts during the holiday-shortened week. Still, wheat prices hung on to overnight gains as traders hoped the U.S. would capture the latest snap tender from Egypt, due out before the pit open this morning. U.S. soft red winter wheat out of the Gulf remains up to 50-cents cheaper than French originations.