Export Sales Brighten Market Gloom
Declining production in South America may have spurred Asian customers to finally commit.
Bryce Knorr
Published: Feb 20, 2009
Bulls haven't had much to cheer about this week, but today's strong export sales report could provide a little comfort in an otherwise gloomy market.
Net new bookings of corn and soybeans were especially strong, and even wheat sales topped trader expectations, despite a stronger dollar and rising ocean freight rates.
Corn led the way again this week, with sales of 52.5 million bushels, all old crop. The only downside to the report was its reliance on normal trading partners, including Asian and the Americas, who took most of the grain. Asians were particularly slow to buy early in the season, hoping for lower prices and some cheap local shipments from China's record crop. However, the Chinese government has mostly dampened those hopes by sopping up excess inventory to boost prices and rebuild reserves — it plans to buy almost a quarter of 2008 production, keeping exports minimal for now.
Declining production in South America may also have spurred Asian customers to finally commit. The Argentine corn crop was hard hit by drought, and acreage also suffered because farmers switched to more profitable soybeans. With farmers in Argentina beginning another short strike, buyers may also be wary of committing considering the unstable political environment.
Soybean sales also beat expectations, by a lot, thanks to another strong week of Chinese purchases. Net sales totaled 43.4 million bushels, and China accounted for 74% of the total. That's good news, and bad. Various reports this week had Chinese processors cutting back on sales, so continued strength is good news. But purchases by Japan, once the largest U.S. customer, barely registered on the sales sheet, underscoring just how dependent the market is on China.
Wheat sales also were better than expected at 15.9 million bushels, with a lot of little deals. Competition for exports is still fierce, especially with production from the southern hemisphere hitting the channel. U.S. sales hopes in part depend on sales to Brazil, which will have to rely on other partners after a poor Argentine crop. Russia has indicated it wants a piece of the action, which could provide competition for sales in the last quarter of the marketing year.
For the complete report, click here.
Permalink: Click here
Tagged: wheat, soybeans, usda, soybean, Drought
|