March 7, 2013

Despite reports of huge export sales to China, US soy exports may be severely affected by about mid-May when cheaper Brazilian supplies temporarily dominate the export market, according to Rich Nelson, chief strategist for Allendale, Inc,  McHenry, Illinois, U.S.

News that the US has sold 330,000 tonnes of soy to "unknown destinations" in 2012-13 - presumed to be China - and 345,000 tonnes to China for 2013-14 was representative of "a short-term window - a little frosting on the cake and not a market moving development" he asserted.

Nelson said the overwhelming fundamental argument for a drop in US soy exports is price.

"Brazil has the ability to export cheaper products than we do," Nelson said. "No one wants to buy highly-priced soy."

He said the Chinese had such strong immediate needs for supplies that they made recent announcements of purchases on the basis of availability rather than price.

However, he said those imperatives will change when logistics in Brazil become more favourable.

He said Brazilian soy will emerge to the top of the export market as soon as the current 45-day delay at Brazil's main port of Paranagua is eradicated. The extreme bottleneck has come about because Brazilian producers are shipping both corn and soy to port simultaneously - an unusual situation that will begin to correct itself in coming weeks, he said.

Nelson was definitive about what cheaper Brazilian soy means for the American export market.

"There will be a point when US soy sales drop off to near zero," until less-expensive Brazilian supplies are no longer available for sale, he said.

The February World Agricultural Supply and Demand Estimates projected Brazilian soy exports at 38.4 million tonnes in 2012-13.