How Many Soybeans Is China Buying?

How Many Soybeans Is China Buying?

Weak basis and export data suggest importers are lingering on South American supplies.

Last's week's story on the weekly Export Sales report asked the question: “How Much Corn Is China Buying?” Today's big question is all about soybeans as the 2011 marketing year gets underway.

While China again was the leading buyer of U.S. soybeans, the world's largest importer accounted for only 43% of the total. That relatively low percentage is partly because Chinese processors have only begun to step up purchases after a late summer pause while they chewed through large inventories. But the weak showing is also due to big remaining supplies in South America, which are extending their selling season.

The lack of nearby demand for U.S. originations is one reason for a basis nosedive, with bids in many locations even weaker than last year at this time. Bean deliveries along the Illinois River against September futures are up as a result. Things didn't improve much when USDA later announced China had cancelled 8.8 million bushels, under the daily reporting system for large deals.

New crop soybeans sales as the marketing year begins are below levels from the past two big years. USDA's current forecast likely will be cut more, especially if yields fall as expected in Monday's monthly reports. That rationing could happen if prices continue to move higher. But China will return to the U.S. as its supplier this fall. And, with Argentine output likely to fall due to acreage reductions, China likely will take any surplus the U.S. has.

Corn sales this week of 34.3 million bushels were in line with trade guesses, but shipments also remain very slow ahead of harvest thanks to tight old crop inventories. That helped soften basis along the river system, though there still are no deliveries against September corn, or anything registered for delivery, for that matter. USDA announced the sale of another 5 million bushels to “unknown destinations” under the daily reporting system.

Wheat sales of 18.8 million bushels were better than expectations and the rate forecast by USDA for the marketing year. Half the new business went to “unknown destinations,” with other buyers taking only single loads.

For the complete export report, click here.

Weekly Export Sales (million bushels)

AS OF WEEK ENDING

9/1/11

Actual

Last Week

Trade Est.

USDA F'cast

Export Ship-ments

USDA F'cast

% of USDA Commit.

Ave.

% of USDA Ship-ments

Ave.

Wheat

       18.8

    13.6

    14.7

     16.6

23.0

21.4

42%

40%

26%

25%

Corn

       34.3

    25.1

    35.4

     23.1

5.4

34.7

30%

20%

0%

1%

Soybeans

       16.4

    21.8

    18.4

     16.0

1.5

28.8

35%

22%

0%

0%

Source: USDA, Reuters

TAGS: USDA
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