Strong Export Sales Ahead of USDA Report Today
Attache Feed Grain Report for China shows feed demand strong, U.S. benefitting
Strong Export Sales
- Soybean sales for the week ended October 1 were very strong again at 95.2 million bushels.
- New net sales to China of 40.4 million bushels brings their 2020/21 total commitments 812 million bushels; over four times greater than last year.
- Corn sales last week of 48.3 million bushels were toward the upper end of market expectations.
- China corn purchases were only 748,000 bushels, with their total purchases for 2020/21 at 393.7 million bushels compared to just 2.3 million last year.
- Export sales of wheat were near the upper end of market expectations totaling 19.5 million bushels.
- Total wheat export commitments of 534 million bushels are up 8% from last year.
- Upland cotton sales of 178,400 running bales were down 24% from the previous week and 27% from the prior 4-week average.
FBN’s Take On What It Means: Export sales of corn, wheat and beans are all ahead of the pace needed to reach the current USDA projections for the marketing year, which will likely be adjusted upward. China was a strong buyer again, but the next report could be a bit slower due to their weeklong fall holiday.
USDA/FAS Attache Feed Grain Report for China
- The key item in the report was forecasting a 3.2% increase in feed grain use for China this year or a volume of 6.8 million tonnes versus last year.
- Feed and residual use is forecast to rebound to levels seen in 2017/18.
- Total feed and residual use excluding rice is 219 million tonnes with the boost primarily tied to expansion of the swine and poultry industries.
- Feed and residual for corn, sorghum, barley, and wheat combined use was 212 million tonnes in 2019/20 and 208 million in 2018/19.
- Corn imports are forecast at 7 million tonnes but it is expected that the 7.2 million tonne TRQ already has been used up. Plus, there are rumors that another five million tonnes could be allocated (2 million to Black Sea, 3 million to US) with the industry requesting an additional 20 million tonnes.
- Sorghum imports are seen higher, while barley imports are forecast at 5 million tonnes, down 500,000 versus last year.
- Wheat imports are forecast at 7 million tonnes with COFCO stating it will utilize the entire TRQ volume.
FBN’s Take On What It Means: FBN sees China importing more corn than 7 million tonnes given that the buyer already has more than that total on the books from the US alone. Corn delivered to China is at times cheaper than domestic corn. Wheat imports also are forecast to be strong. Suspicion is that China will boost its feed wheat use as well, but the country has ample stocks of older wheat. The takeaway is that Chinese feed demand is strong and the U.S. is benefitting.
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