U.S. soybean exports are shining, but not shocking: Braun

Soybean shippers in the United States - the world’s leading supplier between September and March - have been extremely busy pushing out record volumes of the oilseed overseas.
But even though more than two-thirds of the yearly volume has already left U.S. ports, the marketing year is far from over and what happens in the next seven months will have a huge impact on domestic soybean supply and ultimately, soybean futures prices.
The United States has shipped a record volume of soybeans in the first 21 weeks of the marketing year at 38.79 million tonnes (1.425 billion bushels), according to the latest export inspection data from the U.S. Department of Agriculture.
This is well ahead of where shippers were last year at this point, which stood at 32.98 million tonnes, and moderately ahead of the same point two years ago - 37.47 million tonnes.
However, the 2016-17 U.S. soybean exporting campaign is lagging the previous four years relative to USDA’s marketing year projection in each January.
By Jan. 26, roughly 70 percent of the annual 55.8 million-tonne target had left U.S. ports. This figure was as high as 77 percent by the same date in both 2014 and 2015, and last year the end-of-January pace was just below 72 percent.
Although huge amounts of soybeans have been streaming out of U.S. ports at a record pace, a fast clip will need to persist if the United States is to ship over 2 billion bushels of soybeans by Aug. 31.
There is no such thing as a "seasonal shipping pace" as every marketing year features a different set of conditions, but we can at least calculate what the average weekly pace of soybean shipment needs to be from today through Aug. 31 to arrive at USDA's target of 2.05 billion bushels (55.8 million tonnes).
With about 17 million tonnes left to ship as implied by the latest inspections data - and assuming USDA’s latest annual export target holds - this means that soybeans must leave U.S. ports at an average pace of 548,530 tonnes per week over the next 31 weeks.
This would represent the heaviest finishing schedule for soybeans in at least the last six years, but it is not impossible given that the first 21 weeks of 2016-17 has seen the largest average weekly soybean shipments probably of all time at 1.847 million tonnes per week.
With the exception of last year, the second half of the marketing year usually features fewer and fewer shipments as it progresses, so exports over the next few weeks will be very indicative of whether the United States is on track to ship over 2 billion bushels this year.
Industry harvest estimates for the United States’ stiffest competitor for soybean exports, Brazil, have been creeping upward in the past couple months. Some figures now touch or exceed 105 million tonnes, easily surpassing the record 97.2 million. Brazil will exchange places with the United States in March as the world’s key source for soybeans.
Because of Brazil’s late-season drought last year, the U.S. was able to rake in an additional 4 million tonnes of business during the last two months of the year - July and August - boosting the 2015-16 final soybean exports to 52.7 million tonnes, or 1.936 billion bushels.
Had year-end exports taken a more normal trajectory in 2015-16, final shipped volume would have been closer to 48 million or 49 million tonnes, or about 1.8 billion bushels.
This is good to remember for this year because if Brazil or any other supplier does not have the problems that they did last year, an end-of-season export surge is unlikely for the United States, as it was the only way that 2015-16 exports far surpassed initial expectations.
This number was in line with what the trade had been expecting, which has generally been the trend in recent weeks. (reut.rs/2k1ra8D)
This brings total accumulated U.S. soybean sales in the 2016-17 marketing year to a record 50.464 million tonnes by this date, which is 90.5 percent of the full-year target. This sales pace appears relatively average, as commitments were at 88 and 94 percent by this week in the last one and two years, respectively.
China is always the primary buyer of U.S. soybeans during the first half of the marketing year, and this year, the country has purchased about 18 percent more soybeans than the previous maximum amount for the period of Sept. 1 through Jan. 26, which occurred in 2014-15. (reut.rs/2kXy2rJ)
But this year’s total sales thus far are only 11 percent higher than where they stood on this date in 2015. What this indicates is that buyers of U.S. soybeans other than China have not been stepping in to purchase as much as they usually do, and this is particularly pronounced in European countries. (reut.rs/2k6egbC)
The concern here is over the participation by other countries in U.S. soybean trade. When China turns its attention mostly on Brazil in the next month or two, will other typical customers order up any cargoes, or will their lessened interest in the U.S. product thus far carry through August?
The USDA had already set the initial bar for exports much higher than they ever have before in 2016-17, so making it to that 2.05 billion bushels will be no small feat itself.
If U.S. soybean shippers are able to fulfill USDA’s target by Aug. 31, and assuming no major changes to crush, the final domestic soybean carryout for 2016-17 will be 420 million bushels, more than double where it ended up in the previous two years.

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