CHICAGO: US soybean export sales have been languishing for much of the summer following a record-shattering Brazilian crop, but demand for US shipments is gathering pace, led by renewed demand from top importer China, traders and analysts said.
Export sales last week handily topped trade expectations, surging to the second-highest level so far this year, and sales to China exceeded the previous three weeks' combined, according to US Department of Agriculture data on Thursday.
"The US is flush with beans and major importers are taking advantage. US beans are very competitive in the world market," said Terry Reilly, senior commodities analyst with Futures International.
US farmers are preparing to harvest their largest soybean crop on record this autumn, adding to the more than 10 million tonnes of soybeans remaining from the previous crop, the fifth largest end-of-season US supply ever, according to the USDA. Global 2016-17 ending stocks are projected at a record-high 97 million tonnes.
Key to absorbing the excess supply will be China, which imports nearly two-thirds of the soybeans traded globally.
The country's total soybean purchases for 2017-18 (Sept/Aug) season shipments from the United States stood at just 3.49 million tonnes as of Aug. 10, 46 percent behind the same point last year and the lowest mid-August new-crop sales commitments since 2006, according to USDA data.
Chinese importers are now turning to US shipments that are priced at least $12 per tonne below cargoes loaded at Brazil's Paranagua port for September through November shipment, according to traders.
"The Chinese still have a fair amount of pricing to do. They are extremely short bought from the third week in September forward," said Dan Basse, president of AgResource Co.
In the past week, the USDA has confirmed 549,000 tonnes in soybean sales to China and unknown destinations via its daily reporting system, the strongest stretch of government-confirmed soybean sales in at least two months.
In addition, Chinese importers signed non-binding agreements to buy 3.8 million tonnes of US soybeans at a ceremony in Omaha, Nebraska, this week. That followed purchase agreements for nearly 12.5 million tonnes in a ceremonial signing last month in Iowa.
Cash premiums for US Gulf Coast shipments have climbed by more than 10 cents a bushel over the past 10 days on the rising demand and as futures skidded to a 1-1/2-month low.
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