December 15, 2012

The US' soy exports are facing a great fall as highlighted in a USDA report which flags a silver lining to oilseeds groups from the summer's drought.

The USDA, explaining a decision on Tuesday (Dec 11) to leave its forecast for US soy shipments in 2012-13 unchanged at 36.6 million tonnes (1.354 million bushels), well below the all-time high despite a record start to the season - said that the sharp drop-off in trade is nigh.

"The record pace," which saw the volume of soy exports inspected by officials reach 648 million bushels by December 6, "is unlikely to continue very long," the USDA said. "It is likely that an uncommonly high percentage of soy exports will be shipped in the first half of the marketing year.

According to USDA, "Exports should start slowing with a steep decline in new sales," in comments ahead of weekly US export sales data expected to come in at 600,000-850,000 tonnes, a historically strong figure, if below the 1.14 million tonnes recorded the week before.

The expectations of the slump in trade reflect expectations that the onset of South American harvests early in 2013 will bring a fresh supply of soy on-stream, replenishing global supplies depleted by the region's own poor harvest this year, besides that in the US.

Already, soy processors in Argentina and Brazil "are slowing crush rates due to the scarcity of remaining soy stocks there," the USDA said.

This dynamic was boosting the competitiveness of US exporters of soymeal and soyoil, the main products of soy crushing, "at least for the next few months", and fuelling a rise in shipments to China which have in two months beaten their total for the whole of 2012-13.

"In November, unusually large export sales of soyoil have suddenly boosted US trade prospects for the commodity," said the department, which on Tuesday hiked by 280,000 tonnes, to 820,000 tonnes, its forecast for soyoil exports in 2012-13.

The ability of US crushers to meet this demand is being helped by a positive factor stemming from the summer drought in the US, the worst since 1956, which cut yields to well below initial expectations.

The USDA, expanding on an upgrade of 210,000 tonnes to 8.30 million tonnes in domestic soyoil production, said that the revision was down to "higher expected rates for both the crush and oil yield".