China Cools Demand for Soy

U.S. soybean export sales slid to their lowest in the current marketing year last week, fueling concerns that formerly ‘sizzling demand is cooling down (China imported 9 million tonnes of soybeans in December!).’ Even weekly sales reported Thursday morning were lackluster at 348,900 MT, up noticeably from the smalls sales in the previous week, but still down 71% from the prior 4-week average.

Soybean crushers in China, the world’s top soy importer, have slowed purchases of beans in recent weeks as soaring prices hurt profits and crushers work through hefty stockpiles ahead of the Lunar New Year holiday.  Higher soybean prices and waning demand for soyoil and soymeal have hurt profits, cutting crush margins by more than half since the start of the year.

Sentiment quickly shifted when the USDA made an unexpected cut to their 2016 crop forecast, which sent prices soaring this morning and into the close. Yields were reduced to 52.1 bpa from 52.5 bringing production down to 4.307 billion bushels. USDA also cut soybean ending stocks by 60 million bushels to 420 million against the average trade guess of 468 million bushels.

South American Crop Consultant Dr. Michael Cordonnier lowered his Argentine soybean crop estimate by 1 MMT to 55 MMT. Conab estimates Brazil’s 2016-17 soybean crop at a record 103.8 MMT, up 1.35 from its December crop estimate. Agroconsult is estimating a Brazil soybean crop of 104.4 million tonnes, up from a November estimate of 102.6 million tonnes, as favorable climate conditions boost production prospects.

WRITTEN BY Alyssa Badger

Alyssa started her career in 2008 at the Board of Trade managing a firm that had a primary focus in grains. The nucleus of her position centered around order entry and research development; from there, Alyssa's enthusiasm for commodities continued to grow and expand. This enthusiasm lead her to move to West Texas and assist in hedging for the largest originator of U.S. cotton to textile mills worldwide. Alyssa has now settled back in Chicago as a Trading Consultant for Highground Trading, Inc. Contact Alyssa