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U.S. grains: U.S. exports get no Valentine’s Day love

China January soybean imports down 13 per cent versus year-ago

Chicago | Reuters — Chicago Board of Trade (CBOT) grains and soybean futures tumbled on Thursday on news that China and other buyers had canceled a flurry of U.S. soybean orders in early January and Argentina’s soy crop could be larger than previously expected, traders said.

The U.S. Department of Agriculture’s (USDA) export sales report showed net cancellations of U.S. soybeans totaling 610,900 tonnes in the week ended Jan. 3, as the agency continues to clear a backlog caused by the U.S. government shutdown.

Analysts were expecting net sales of 600,000 to one million tonnes.

The cancellations included 807,000 tonnes intended for China, the world’s top soy importer, and 444,000 tonnes for “unknown” destinations, which the market believes could also be China, traders said.

As a result, some traders say they are doubting China’s promised commitments to Washington to make substantial purchases of U.S. farm products, and whether the ongoing trade negotiations between U.S. and Chinese officials will lead to a resolution of their tariff dispute.

“The bottom line: We don’t see the five million tonnes of U.S. soybeans that China pledged in early December to buy,” said Terry Reilly, senior agriculture analyst for Futures International. “The numbers just don’t add up.”

CBOT March soybeans settled the day down 13 cents at $9.03-1/2 per bushel (all figures US$). Earlier in the day, the contract dipped to $9.03 per bushel, the lowest since Jan. 22.

Chinese imports

The market was also assessing the latest Chinese import data: it imported 7.38 million tonnes of soybeans in January, down 13 per cent compared to a year earlier, but up 29 per cent from December, according to Chinese customs data.

The data did not provide a breakdown of suppliers. How much of that volume came from U.S. soybeans is not yet clear. USDA is slated to release a combined export sales report for the weeks ending Jan. 10 through Feb. 14 next week.

Also, China’s growing reliance on South American soybeans could be reinforced by a strong harvest in the region. Argentina’s soy crop is expected to reach 52 million tonnes during the 2018-19 season, up from 50 million tonnes previously forecast, the Rosario Grains Exchange said late on Wednesday.

“That two-pronged attack, with the U.S. exports and the Chinese imports data, really kicked off the selling in the markets today,” said Mike Zuzolo, grains analyst at Global Commodity Analytics.

Corn, wheat down

Corn futures also fell, pressured by the soybean market and technical trading. CBOT March corn settled down four cents at $3.74-3/4 per bushel on Thursday.

Chicago Board of Trade (CBOT) wheat futures fell to a six-week low and K.C. wheat futures dropped to new contract lows across the board, amid technical selling and traders scrambling to respond to disappointing export sales in wheat, too.

The U.S. Department of Agriculture’s (USDA) export sales report showed net sales of U.S. wheat totaling 161,400 tonnes (old- and new-crop years combined) in the week ended Jan. 3, as the agency continues to clear a backlog caused by the U.S. government shutdown.

Chicago Board of Trade’s March soft red winter wheat settled down 15-1/4 cents at $5.07 per bushel, ending a four-session rally in prices. Earlier in the day, it fell to a low of $5.06 per bushel, the lowest since Jan. 3.

K.C. March hard red winter wheat ended down 12-1/2 cents at $4.81-1/2 a bushel, while MGEX March spring wheat fell five cents to $5.74-3/4 a bushel.

— P.J. Huffstutter reports on agriculture and agribusiness for Reuters from Chicago; additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore.

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