While the Trump administration made positive headwinds with China this past week, U.S. soybean exports are likely still at a disadvantage. South American production looks strong, and paired with its lower price point, might continue stealing export bushels from American farmers.
Good weather conditions put the Brazilian soybean crop near 4.78 billion bu.—almost 350 million bu. more than the current USDA forecast, according to University of Illinois FarmDoc Daily’s Todd Hubbs. Argentine production projections sit at 2.04 billion bu., up from last year’s 1.39 billion bu.
“Estimates for Brazilian soybean exports in 2018-19 sit at 2.82 billion bu., up 30 million bu. from last marketing year,” Hubbs states. “From September to October, Brazilian soybean exports came in near 552 million bu., up from 225 million over the same period in the 2017 marketing year. Over 90% of this total went to China.”
Argentine exports are increasing, too. Its exports to China are forecasted to reach 294 million bu. this year, up 216 million over the 2018 marketing year. The U.S. is forecasted at just 1.9 billion bu. total exports, which reflects the loss of the Chinese market.
According to current U.S. Census Bureau trade data, through October 2018, the U.S. exported just 12.4 million bu. of soybeans to China—down more than 350 million over the same time in 2017. U.S. soybean exports to China are typically strongest in the first half of the marketing year (which has passed, practically speaking) and take a downturn in the January to March timeframe when South American crops are harvested, according to Illinois research.
Despite weak Chinese demand, the U.S. did pick up export sales to the European Union, Egypt, Argentina and Pakistan through October 2018. The U.S. exported a total of 325 million bu. through October, down 37% from the previous year. WASDE puts the U.S. at 47% total export commitments for the marketing year, well below the usual average of 64% to 84% at this time.
“The continuation of current trade patterns for soybeans appears probable at this time with considerable competition from South America as we move into 2019,” Hubbs said.