FORT COLLINS, Colo., Jan 6 (Reuters) - With harvest well in the past, demand and particularly exports are now in focus for U.S. soybeans and corn in the current marketing year. Exports are on an OK but not great pace so far, though the forward sales are of top concern for soybeans.

Some analysts believe government estimates for U.S. corn and soybean exports in the 2021-22 marketing year ended Aug. 31 are too aggressive, especially as sales have cooled off in recent weeks.

To meet these targets, the sales and export volumes needed over the next eight months are not out of line with historical norms, but they might be when placed in context with price. For soybeans, U.S. export prices are in range of last year but about 50% greater than at the same point in 2020.

Export sales have been unimpressive as of late, including a marketing-year low for soybeans and a near-low for corn in the latest week. However, the commitment pace for corn is ahead of normal relative to expectations, largely owing to huge Chinese purchases early in 2021.

Some 65% of the U.S. Department of Agriculture’s 2.5 billion-bushel corn export forecast had been sold as of Dec. 30, identical to the year-ago pace. By the same date, soybean sales covered 75% of the 2.05 billion bushels predicted for export in 2021-22. That compares with 91% a year ago.

The soybean pace lags most typical years, though it exceeds the Dec. 30 rate for 2017, 2018 and 2019, and final exports in all three years came in lower than what was expected in December. Top buyer China owns just 57% of total soy sales, the lowest share in 13 years when excluding the two trade war years.

Price was likely a major deterrent for China and other buyers throughout last year as sales to both groups were notably below average in the second half of last marketing year. Soybean prices are well off their mid-2021 highs but still safely above typical levels.

Brazil’s first soybean shipments are imminent as harvest just began, so China’s lighter U.S. interest and high prices might be enough to justify a USDA reduction to U.S. exports in next week’s update. But the recent escalation of the South American drought complicates that idea.

Analysts expect USDA to cut Brazil’s soybean crop estimate to 141.6 million tonnes from 144 million previously due to the dryness and terrible crop conditions in southern states. But some outlooks reach as low as 131 million tonnes, which would be a huge blow for the top soybean exporter but a potential opportunity for U.S. business.

It is uncertain whether global soybean demand is strong enough for U.S. exports to fully replace whatever is lost in Brazil, but continued problems for South America could keep bean prices elevated, so end users may have to decide either to accept pricy U.S. offerings or seek alternatives to the oilseed.

USDA last month estimated 2021-22 U.S. soybean ending stocks at 340 million bushels based on exports at 2.05 billion bushels, the number that some market-watchers think is too heavy. Last year’s stocks came in at 256 million, so exports by themselves could have a long way to go to reverse the year-on-year supply increase.

The trade average for U.S. soybean ending stocks is 348 million bushels as the market awaits USDA’s update next week, hardly changed from last month. But Wednesday’s update will contain a lot of moving parts, including U.S. yields and quarterly stocks, on top of any demand tweaks.

If soy supplies this month remain close to expectations, there is a path to lighter soybean prices in the future, which could potentially stimulate demand. U.S. planting intentions coming March 31 are known to rock the boat, and in the meantime, it is not too late for parched South American crops, especially in Argentina, if the misfortunes are soon reversed.

Karen Braun is a market analyst for Reuters. Views expressed above are her own.

Source: Reuters

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