While the prospect of expanded exports to China appears promising with the Phase 1 deal, the overall increase in US soybean exports may not be at levels equivalent to Chinese buying said Todd Hubbs, agricultural economist with the University of Illinois in a letter to Extension agents called Farmdoc Daily.
During the 2018-19 marketing year, the US shipped 489 million bushels of soybeans to China and 1.258 billion to the rest of the world. Exports to the rest of the world increased 41% from the previous marketing year as the US picked up the slack from large Chinese buying out of South America.
A reversion to higher South American exports to the rest of the world’s major importers seems assured under expanded Chinese buying of US beans. Projections for non-Chinese soybean imports for the world could decrease around 10 million bushels to 2.318 billion for the marketing year.
And it seems unlikely China would walk away from trade relationships built during the trade war, particularly when substantial uncertainty remains about prospects for a long-term deal.
EXPORTS SEEN UP
The last projection for US soybean exports during the marketing year was 1.775 billion bushels, seven million more than last marketing year’s total. Accumulated soybean exports through Oct. 24 equaled 292 million bushels, 21 million more than last year’s pace. Also, 416 million bushels had been sold but not shipped.
Current outstanding sales are close to 100 million bushels lower than last year despite increased Chinese buying, and unshipped sales to China totaled 167 million bushels.
In the five marketing years before the trade war, US exports to China averaged 37.7% of China’s total imports. If the trade deal saw a reversion to this historical average, exports to China this marketing year would be 1.18 billion bushels.
By factoring in export substitutions related to expanded South American shipments to non-Chinese nations, expansion of US exports by 70 to 100 million bushels above the present 1.775-billion-bushel projection seems realistic.
WORLD PRODUCTION SEEN DOWN
World soybean production is set for much lower totals in 2019 because of the reduction in US acreage. US soybean production was projected at 3.55 billion bushels, and the yield forecast of 46.9 bushels per acre may see further decline with the Nov. 8 production report.
Brazilian production was forecast to be 5.3% higher than last year as more export demand drove an increase in acreage. Projected harvested acreage there sits at 91.2 million acres, up from 88.7 million last year.
Brazil’s soybean yield in 2018-19 was 48.5 bushels per acre. The yield projection for the current crop was 49.5 bushels an acre, and dry conditions and a slow planting start in many areas may decrease the potential for a larger yield.
Argentine soybean production was forecast at 1.947 billion bushels, down a little more than 4% from last year’s estimate. The evolving nature of Argentine politics injects considerable uncertainty into future profitability for farmers there.
CATTLE, BEEF RECAP
Cash cattle trading took place last week at mostly $112 up to $114 per cwt on a live basis, up about $3 from last week. Dressed-basis trading was reported at $180 per cwt, up $5 to $6 from the previous week.
The USDA choice cutout Monday was up $1.61 per cwt at $234.81, while select was up $2.87 at $210.38. The choice/select spread narrowed to $24.43 from $25.69 with 62 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Friday was $146.45 per cwt, up $0.47 from the previous day. This compares with Monday’s Nov contract settlement of $149.07, down $0.05.