U.S. soybean shippers may have been disappointed with demand revisions from the U.S. Department of Agriculture on Thursday, but there is good reason to maintain optimism over the domestic export outlook.
In its monthly supply and demand report, USDA reduced 2016/17 U.S. soybean exports to 2.025 billion bushels. This follows four straight months with the estimate having been unchanged at the 2.05 billion mark.
While the new figure still represents a 5 percent increase over the previous high set last year, the move is somewhat unprecedented as the U.S. agency has not made any cuts to domestic soybean exports later than January during the past three record-setting years.
The decrease in U.S. exports was not severe – only 25 million bushels or 680,000 tonnes – but given that global soybean demand actually increased in Thursday’s report, the downward adjustment may have been somewhat surprising, especially since the country has been shipping record volumes of soybeans in recent months.
China, the world’s largest soybean buyer, is now expected to import 87 million tonnes this year, up from the 86 million that USDA issued last month. This is an all-time high for the country, which imported 83.23 million tonnes of soybeans last year.
The extra business from China was in no uncertain terms awarded to Brazil, as USDA projects that the top global exporter will ship a record 61 million tonnes of the oilseed this year, an increase of 1.5 million from last month’s estimate.
And the supply should certainly be around to fulfill the expectation.
USDA cranked up the outlook for Brazil’s soybean harvest – which is roughly halfway complete – to 108 million tonnes. This 4 million-tonne increase over last month’s peg is effectively the size of the loss suffered by the previous crop amid a late-season drought, which spiked demand for the U.S. product beginning last July.
It does not appear that the United States will get the same late boost to its soybean exports…