Oilseeds. World Markets and Trade. December 2018 - USDA Dec. 11, 2018
Strong Brazilian Soybean Sales Expected to Slow Rebound in Argentine Exports
Brazil’s Oct/Sep soybean export forecast for 2018/19 is raised 4.0 million tons this month to 81.0 million and reflects a similar change in the current local year forecast. These changes come on the heels of record exports in both October and November. Combined exports for these 2 months totaled roughly 10.5 million tons, eclipsing by far the previous record of 4.5 million tons set in 2017. And with total exports for the 12 months ending November approaching 82 million tons, this forecast assumes a somewhat slower pace of exports for the remainder of the Oct/Sep marketing year compared to last year.
Currently, nearly all of Brazil’s exports are destined for China. Facing stiff competition from Brazil, Argentine exporters will find it difficult to gain traction in the market until Brazil’s export pace slows in the latter half of 2019. This is even with a rebound in supplies resulting from an improved 2019 harvest. Accordingly, Argentina’s Oct/Sep export forecast is reduced 3.0 million tons to 5.0 million tons reflecting this slower pace of early-season trade. Local year exports are reduced 2.0 million to 8.0 million tons. Historically, China has been the principle buyer of Argentine soybeans, accounting for more than 90 percent of annual trade. As long as China’s 25 percent duty remains in effect, it will be difficult for Argentina to expand sales into other markets without deeply discounting its soybeans against fierce U.S. competition. This will leave Argentine producers dependent on China for most sales.
China’s import forecast remains unchanged at 90.0 million tons. This is below last year with both years significantly below the historic pace of demand growth. Efforts by livestock interests to reduce the use of soybean meal in rations, weak crush margins in response to the tariff on U.S. soybeans, and any potential impact from African Swine Fever have all negatively impacted demand over the past 6 months. Argentina’s export prospects will ultimately depend on the strength of China’s demand as well as any thaw in U.S./China trade relations that have so far kept U.S. soybeans out of the China market.
OVERVIEW FOR 2018/19
Global oilseed production is forecast higher this month at 601.0 million tons. Soybean production is up to 369.0 million tons on gains in Brazil and Nigeria. Rapeseed production has been cut to 70.0 million tons on reductions for Australia and India. Global soybean imports are almost unchanged, while exports are up slightly on a gain for Brazil exceeding a reduction for Argentina. The U.S. season-average farm price for soybeans is projected unchanged at $8.60 per bushel.
U.S. soybean export bids in November, FOB Gulf, averaged $329/ton, up $5 from October. In comparison, FOB Brazil Paranagua averaged $383/ton, down $29 from October. FOB Argentina Up River averaged $369/ton, down $24 from previous month. U.S. soybean meal export bids in November, FOB Gulf, averaged $346/ton, down $13 from October. In comparison, FOB Brazil Paranagua averaged $335/ton, down $14 from previous month. FOB Argentina Up River averaged $332/ton, down $8. The uncertainty and anticipation over possible resolution to U.S. – China trade disputes ahead of the G-20 summit were most likely the reasons for price movements in November.
For the week ending November 29, U.S. 2018/19 soybean export commitments (outstanding sales plus accumulated exports) to China totaled 584,000 tons compared to 20.7 million a year ago. Total commitments to the world were 24.1 million tons, compared to 36.3 million for the same period last year. Accumulated soybean exports were at 13.2 million tons, 43 percent below the same period last year. Accumulated soybean exports to China were at 339,000 tons, 15.9 million tons less compared to last year. Shipments to the rest of the world were at 9.2 million tons, 3.9 million above last marketing year for the same period.