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China Continues Quick Turnaround On Corn Purchases

China wasn’t the biggest buyer of U.S. corn in this week’s tally by USDA. But before the country’s huge purchases this week, the data shows China was continuing its earlier pattern of buying and immediately shipping smaller amounts

China turned around another 4.7 million bushels in the week ending Oct. 6, bringing its total commitments to 40.3 million bushels. USDA Thursday announced the sale of another 35.4 million bushels to China, bringing its presumed total for the marketing year to 75.7 million, only a few million shy of USDA’s current estimate from all destinations for the entire 2011-2012 season.

The agency refused to budge on its export forecast in Wednesday’s crop report, despite estimates by the U.S. Grains Council that China could buy between 200 and 400 million bushels for the year. China is also believed to be buying from Argentina this week, as the countries try to end an ongoing trade dispute.

Interest in China nearly overshadowed the huge total for the week, 52.9 million bushels. Japan and Mexico accounted for 40.2 million bushels of the total, with South Korea also taking a couple of loads, continuing its practice of buying ahead of USDA reports.

While the pace of shipments has lagged at the start of the 2011 crop marketing year due to tight pipeline supplies, the total picked up this week to 35.9 million, ahead of the pace forecast by USDA for the rest of the marketing year. Total purchases, a better indicator of exports in the long run this early in the season, are way ahead of the typical pace, when compared to USDA’s estimate, a strong indication that the government is low-balling demand to keep its ending stocks forecast from getting dangerously tight.

Total soybean bookings are also off to a good start, with another 24.7 million bushels of new sales this week. China accounted for 83% of the total, as its buying appears to be shifting from South America back to the U.S. Soybean shipments also remain slow, but increased to 22.2 million this year, helping boost basis levels in the export pipeline.

However, September crush reported this morning by the National Oilseed Processors Association came in at only 110.3 million bushels, 8 million below August and trade estimates. That could be a sign of demand rationing by the livestock industry, though processor margins were also weak during the period. The NOPA report has taken on added significance since the government did away with its Census Bureau tally due to budget cuts.

Wheat sales also were higher this week at 18.4 million bushels, well above both trade estimates and the weekly rate forecast by USDA for the rest of the marketing year. Both sales and shipments are running well ahead of average pace for this time of year, another indication USDA is too low on its demand estimate for the year despite increased competition out of Canada, Australian and the Former Soviet Union.

Japan was the top buyer for U.S. wheat, but China also picked up a load. While China doesn’t import a lot of wheat, it does buy higher quality supplies from abroad to meet demand it can’t produce domestically.

For the complete export report, click here.