US. Soybean Exports Continue to Impress

26.10.2016

Last week the US shipped out a little over 100 million bushels of soybeans. This was a record export week and export sales continue to roll in. With strong export demand what does this mean for prices going forward?

To put last week in perspective... We shipped over 100 million bushels of soybeans in a 7 day period. Right now the USDA is forecasting a 395 million bushel carry over in 2015/2016. So, we shipped out the equivalent of just over 25% of that in one week. On top of that we are expecting another strong week of export sales with over 700,000 metric tons reported on the daily wire alone. What does all of this mean?

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While it seems certain that this year is a record production year for soybeans we also are seeing a record pace of demand. Even with the best soybean crop we have seen in the US it is obvious that the USDA's projected carry over of 395 million bushels may not be enough of a cushion in case there was a weather issue in South America or the next US growing season. With export numbers like we saw last week we could theoretically be cleaned out of any carry over in a matter of weeks if there was a reason for global end-users to need to buy more US beans.

With expectations for Brazil to produce a 102 million metric ton crop, even though acreage is not increasing dramatically, there is now a lot of pressure on the South American growing season. It will take nearly ideal weather as Brazil as not yet topped 102 million metric tons. Any thing short ofa recordcould drive more business to the US.

On the other hand, there are some analysts who feel that the US national average soybean yield is still too low which could add a much bigger cushion for a weather problem. However, from reports we are hearing the best soybeans were the early planted/early harvested soybeans... If the US national average yield is not much higher than the current USDA estimate of 51.4 (which is a new record by 3.4 bushels an acre) we may need to add a weather premium as we get in to the SA growing season.


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