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September 03, 2020 | FBN Insights | Kevin McNew

China Buys U.S. Beans

Chinese state-owned firms bought at least eight cargoes of beans on Wednesday

China Buys U.S. Beans 

  • Chinese state-owned firms bought at least eight cargoes of beans on Wednesday, according to a wire service report.
  • US soybean exports to China typically rise in the fourth quarter of the year after US crops are harvested and as supplies from Brazil decrease.
  • Brazil exported 6.2 million tonnes of soybeans in August, continuing the seasonal decline from 10.4 million in July. 
  • Marketing year to date Brazilian exports are 77.0 million tonnes compared to 54.1 million last year.
  • Brazil’s current exports are 4.0 million tonnes below the USDA’s 81.0 million tonnes annual forecast with 4 months still left in the export season.
  • Brazilian grain exporter association Anec projects September soybean exports will be 4.2 million tonnes.

FBN’s Take On What It Means: China’s switch to purchasing US soybeans is expected as the export program in Brazil slows into the end of their marketing year. Looking at the current pace, USDA may need to raise total commitments in upcoming reports. 

World Corn Exports Up In August

  • Global corn commitments in August were 15.7 million tonnes, the largest since the 15.8 million in July 2018.
  • Shipments are up from 14.4 million tonnes last month and 14.6 million last year. 
  • Brazil led all exporters, loading 6.8 million tonnes of corn compared with 5.0 million last month and 7.7 million last year. 
  • Argentina’s exports increased slightly to 4.4 million tonnes in August from 4.3 million last month. 
  • US  shipments of 4.1 million tonnes were just 26% of the world total, the lowest since January 2020. 
  • Ukraine shipped just 200,000 tonnes vs 424,000 last month and 280,000 last year. 

FBN’s Take On What It Means: Brazil’s increased exports were driven by large monthly shipments to the EU. Ukrainian corn export prices have risen sharply following the recent cuts in this year’s crop forecasts, making it less competitive with other world origins. The US has not been able to capitalize on the increase in corn trade and gain market share, though the decreasing value of the Dollar (see Chart of the Day below) and less competition from Ukraine may help in coming months. The US will likely still need to see continued increase in buying from China to change the balance.

 

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