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Export Sales Are Feast or Famine

Government data can sometimes lack clarity, but this morning's Export Sales Report was unambiguous in message: Bean sales are booming, while corn and wheat business continues to struggle at the start of the New Year.

Buoyed by more Chinese buying, total soybean sales topped 50 million bushels in the latest week, well above trade guesses and almost four times the weekly rate forecast by USDA. While most of those sales were previously announced under the government's daily reporting system, total Chinese purchases of 31.6 million bushels were clearly impressive.

Chinese processors have aggressively bought beans in recent weeks, because local supplies were bought up by a government trying to curb rural unrest by boosting prices and building reserves. Though staggering, Chinese purchases accounted for only 63% of this week's total, down from its near-monopoly of U.S. business. Buyers included countries around the world, suggesting end users may be getting nervous about the availability of South American supplies shrunk by poor weather and the global financial crisis.

While bean sales boomed, corn business was again a bust, making a marketing year low for the second straight week. Net new sales totaled just 8.5 million bushels, falling well below the 27.4 million needed to meet the target for the marketing year, which USDA reduced on Monday. Cheap feed wheat continues to undercut the U.S. on world markets, and the rising value of dollar isn't helping, either. Some buyers also appear to be waiting for China to resume exports following harvest of a bumper crop that just keeps getting bigger. USDA added nearly 200 million bushels to its estimate of Chinese production on Monday.

Wheat sales were also paltry at 6.2 million bushels, though the total was up from last week's marketing year low. However, the wheat trade did get a bit of good news this morning, when Egypt filled part of its latest snap tender with 2 million bushels of U.S. soft red winter wheat. The balance of the deal, around 1 million bushels, came from Russian, which snared most of Egypt's recent business. U.S. prices quoted in the deal were close to Russian offers on a free-on-board basis, suggesting cheap freight helped keep  American grain in the ballpark.

Net soft red winter wheat exports were negative the past two weeks on a net basis, due to cancellations, including one by Egypt, so today's sale should help lift the mood of the market a little.