US soyabean exports will break a record in the upcoming marketing year despite the growing threat of a trade war with top-buyer China, the US Department of Agriculture said on Thursday, but traders expressed doubts about that forecast.
Skeptics noted that heated rhetoric between the United States and China, the world's top buyer of the oilseed, has sent tremors throughout futures markets in recent months and disrupted trade flows of products ranging from steel to sorghum.
Still, the USDA forecast in a monthly report that US soyabean exports in the 2018/19 marketing year would rise 10.9 percent to 2.29 billion bushels, adding that competition from South America will be limited this fall. Just a month ago, Beijing proposed to slap tariffs of 25 percent on all US shipments of the oilseed.
The USDA bases projections on current government policy and does not factor in potential tariffs or other trade actions yet to be implemented. "It is interesting for (USDA) to post that high of a number in the face of the China trouble that hasn't been resolved," said Ted Seifried, analyst with Zaner Ag Hedge.
The forecast came the day China's agriculture ministry predicted the country will cut soyabean imports for the first time in 15 years due to trade tensions with the United States. Doubts about the USDA's projection helped pull Chicago Board of Trade soyabean futures from a peak they hit after the agency released estimates for tighter supplies. The most-active contract reached a session high of $10.33-3/4 a bushel before eventually settling up 5-1/2 cents at $10.21-1/4 a bushel.
"They are really strong on soyabean exports and I am very skeptical of that," Seifried said about the USDA. The USDA report did not break out expected destinations for exports. The agency did raise its forecast for China's soyabean imports by 6.2 percent, or 6 million tonnes, to 103 million tonnes in 2018/19, nearly matching government expectations for the increase in US soyabean exports.
"US soyabean exports projected to increase a large 225 million bushels might be flat out just wrong," Terry Reilly, senior commodity analyst at Futures International," said in a note to clients. "USDA either remains very optimistic on China trade relations and/or bullish Asian demand for soyabean consumption."
China, which needs soyabeans to boost pork production amid surging domestic demand, was expected to account for about 65 percent of global soyabean imports in 2018/19. Beijing has recently stepped up checks on imports of other US commodities including fruit, logs and pork.
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