Chinese Purchases Dominate Strong Soy Sales
Processors foreced to turn to imports after government buys.
Bryce Knorr
Published: Dec 18, 2008
China once again proved it's the Wal-Mart of soybean buyers in the latest weekly export sales report issued this morning by USDA. The world's largest importer of soybeans took 92% of the sales reported, helping boost the total to a strong 33.1 million bushels, well above trade guesses and the weekly rate needed to meet USDA's forecast for the market year.
The big totals suggest Chinese buying continued unabated in the latest week, as processors there are forced to turn to imports after the government bought up local supplies to boost reserves and increase prices received by farmers. Falling rural incomes could be a big source if discontent, something the government fears during this time of global economic crisis, when the country's manufacturing sector is under pressure for the first time in years.
The only bad thing about the strong sales is the lack of other buyers. If China stops its purchases or switches abruptly to South American origin, the fallout could be painful.
That's what's happened to the corn market this year, as regular Asian buyers continue to pick up only hand-to-mouth supplies. Some are turning to cheap feed wheat, made available by a huge global crop and cheap ocean freight, while others hope surplus from a record Chinese corn will ultimately hit the market. However, China indicated it would buy another 200 million bushels from farmers, it's third such purchase, which could keep sales minimal despite a move to lower export taxes.
U.S. corn sales for the week totaled just 24.1 million bushels, in line with trade guesses but below the rate needed to meet USDA's recently lowered forecast for the marketing year. If the pattern continues it suggests the government may have to shave another 50 to 100 million bushels more off its sales target.
Wheat sales continue to wind down after a stellar first half to the marketing year. Net new bookings of 9.6 million bushels were a little below estimates, but more than doubled the rate forecast by USDA.
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Tagged: usda, wheat, soybeans, soybean
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