It's easy for traders to dismiss the annual trade delegations from China to the Midwest as mere photo opportunities. That's why futures actually sold off early on Wednesday, after USDA confirmed one of the biggest sales of soybeans in history. The deal covered 70.9 million bushels and came after Chinese buyers signed deals for $2.8 billion worth of soybeans this week in Iowa. The agency also announced sales Wednesday and today to unknown destinations, adding another 11.1 million bushels. All told, the deals should swell the weekly total reported next week to astronomical levels.
Export commitments to date already are off to a record start for the 2013 marketing year that began Sept. 1. Shipments and sales on the books total 841 million bushels, 61% of the total USDA forecasts for the entire marketing year. China accounts for 552.5 million bushels of the total, and likely will wind up getting many of the 185 million sold to "unknown destinations" as well.
Indeed, the importance of the Chinese export market cannot be overestimated. The world's largest country takes two out of every three soybeans shipped around the world. That total is expected to surge for 2013, rising 350 million bushels to 2.5 billion bushels. USDA doesn't forecast how much the U.S. will sell to China, but it's likely we'll account for a third of the total.
USDA also released its regular weekly total, which showed 33.9 million bushels of net new bookings of soybeans overall in the week ending Sept. 12. That was better than trade expectations. Shipments remain slow as the pipeline is mostly empty ahead of the delayed harvested.
Wheat exports were also good in the latest week at 25.9 million bushels, with Nigeria and Brazil again the leading buyers. Hard red winter wheat accounted for about half the deals. China is still shipping out some of its big purchases of soft red winter wheat, but actually cancelled a small amount of its previous purchases this week. Total commitments are running 13% above the normal rate as the second quarter of the wheat marketing year begins.
Corn sales were fairly sluggish at 17.2 million bushels, as buyers wait for harvest pressure to depress prices. China did pick up another load of U.S. corn, while regular customers like Japan and Mexico account for most of the purchases.