December 13, 2005

US soybean export forecast declines by 1.4 million tonnes

November period Brazilian and Argentine exports are up 2.1 million tonnes (18 percent) and 1.8 million tonnes (55 percent), respectively. This large increase in exports has caused Brazil's local year (February 2005-January 2006) export forecast to increase 12 percent (2.4 million tonnes) to a record 22.2 million tonnes and Argentina's local year (April 2005-March 2006) export forecast to increase 13 percent (1.1 million tonnes) to a record 9.8 million tonnes, the USDA said Monday in its Oilseeds: World Markets and Trade Report.

Strong exports from South America combined with weaker than expected import demand during September to November have reduced US exports this fall. Further, US export commitments as of Dec 8 are down 4.2 million tonnes from 2004/05 and 4.3 million tonnes from the 5-year average to 12.2 million tonnes. This is the lowest commitment level since 1998/99 when US exports were 21.8 million tonnes.

In December, the 2005/06 US soybean export forecast was lowered another 1.4 million tonnes to 27.8 million tonnes, down 3.1 million tonnes from the original June forecast of 30.9 million tonnes. Slow US exports during the first quarter of 2005/06 are the result of weaker than expected global demand for soybean imports. Many importers have been slow to import as the possibility of a 100-million tonnes South American soybean crop looms on the horizon. Importers appear to be buying just enough soybeans to satisfy demand with the expectation that a large South American crop will weaken soybean prices, the USDA said.

As trade expands in early 2006, US exports during the remainder of 2005/06 (December-August) are forecast to strengthen to near 2004/05 levels. While the US is forecast to make up some lost ground in exports, US exports to the EU are likely to remain 2.5 to 3.5 million tonnes below normal levels, resulting in a 3.1 million tonnes decline in US exports from 2004/05 levels. Brazil and Argentina's 2005/06 export forecast is estimated at 25 and 9.7 million tonnes, up 4.5 and 0.3 million tonnes respectively from last year's record level. However, if lower prices cause farmers in South America to hold soybeans away from commercial facilities, as they were reported to have done in 2004/05, US exports could strengthen during the spring and summer.