ANALYSIS: Shortfall in US exports may pull soybean prices lower

14 Jul 2022 | Eduardo Tinti

The prospect of reaching the USDA’s soybean export estimates for the 2021/22 marketing year is becoming increasingly challenging for the US as the country lacks price competitiveness for nearby shipments in a dynamic that may come back to impact futures prices through the coming weeks, market sources have told Agricensus.

The gap between the USDA’s estimate, as of the July update to the Wasde report, and actual 2021/22 US exports could prove to be as large as 2.5 million mt if recent trends do not change, Agricensus analysis suggests.

“I think the USDA is certainly 20 million bushels [544,366 mt] too high and the China [demand] picture is worrisome… [as they] have been cancelling old crop sales in each of the past three weeks,” Larry Shonkwiler of Advance Trading told Agricensus.

“This is certainly [already] impacting the July-August and August-September CBOT spreads,” Shonkwiler added.

If actual exports miss USDA estimates by as much as Agricensus’ figures suggest, this will likely boost US ending stocks when compared to USDA’s current estiwould , which could bear a relevant impact on market prices.

“[The shortfall in exports] is starting to get priced in, but I don’t think the trade is looking for that high of a shortfall [2.0-2.5 million mt] just yet,” senior grain and oilseed commodity analyst at Futures International Terry Reilly told Agricensus.

The US has exported 52.5 million mt from the start of the marketing year to July 7, the latest available weekly export data from the USDA.

The country needs to ship an average of 814,709 mt per week through the remaining eight weeks of the marketing year to reach USDA’s 2021/22 export estimate of 59.1 million mt.

Meeting this pace of exports seems far fetched considering that since the beginning of June the average US weekly export has been just shy of 500,000 mt, with the largest weekly volume reported at 708,669 mt in the week to June 9.

Moreover, the country has reported net reductions in weekly commitments for four consecutive weeks, with accumulated net cancelations of 746,331 mt through that period.

Total 2021/22 soybean export commitments sit now at 59.5 million mt, still above USDA’s export estimates.

One of the main factors behind lacklustre US soybean exports is the lack of price competitiveness against South American beans.

Agricensus’ CFR China price assessments show that since the beginning of July August premiums for beans originated in the US were at least 10 c/bu higher than those coming from Brazil, with the gap widening to 35-40 c/bu since Tuesday.