WASHINGTON, D.C. (RFD NEWS) — USDA released new export sales data this week, offering fresh insight into U.S. agricultural trade with China. While recent purchases have made headlines, analysts say China is once again shifting its focus to South America for soybean supplies.
Market analyst Brian Hoops says China is expected to remain mostly out of the U.S. soybean market for the remainder of the current marketing year, turning instead to South American exporters.
“For the rest of this marketing year, we don’t expect China really to be in the market too much because they’re going to buy from Brazil and Argentina,” Hoops explained. “They’ll start buying from the U.S. probably late this summer when we get into our new marketing season and freshly harvested soybeans.”
Hoops says that shift could eventually prompt USDA to scale back soybean export projections, but he notes a very different outlook for other commodities.
Corn exports are gaining traction, with sales running 35 percent higher than this time last year. Wheat exports are also up, rising 18 percent year over year.
South America remains a key variable in the global grain picture. Grain marketing advisor Brooks Schaffer says weather-related issues there could drive additional demand back to the U.S.
“We really need demand,” Schaffer said. “After the extra stocks that USDA found on the last report, we need demand more than ever. The soybean crop is big and on the way, but it’s not in the bin yet. We’ve lost a lot of crops down there to too much rain during harvest.”
Looking ahead, Schaffer says trade will be critical to market stability.
“We’ve seen China buy over the last few weeks, despite price advantages to Brazil,” he said. “We’re setting records on corn exports, too. Most of that corn has been going to Mexico, but we’re also seeing shipments to nontraditional destinations.”
Demand is also top of mind for the National Corn Growers Association (NCGA). NCGA President Jed Bower warns that strong export sales mean little if they are not reflected in the markets.
“We’ve seen record amounts of corn exported, but they’re just not showing up in the markets,” Bower said. “With extremely high input prices, I believe we’re going to start losing growers at an alarming pace.”
Bower warns that if corn growers begin exiting the industry, consolidation could accelerate, creating even greater challenges for the grain sector.
While China may be slowing its U.S. soybean purchases, export sales data show the country remains active in the sorghum market. Brady Huck with Empower Ag Trading says those sales are helping work through a large supply.
“Milo is a huge crop out here, and it’s good to see China on the books buying some,” Huck said. “We haven’t seen that reflected in the basis yet, but we’ve got to chew through those bushels somehow, and exports are a great way to do that.”
National Sorghum Producers CEO Tim Lust agrees, noting strong export momentum over the past several months.
“When we look at the last 60 days, we’ve had three million metric tons of exports announced,” Lust said. “Two recent sales last week and this week were listed as unknown, but we certainly assume those are China sales.”
Lust says the U.S. sorghum crop is shaping up well, currently running nearly 30 percent larger than it was at this time last year. He adds that domestic demand from the ethanol industry has also been strong.
