November 14, 2011

 

US soy exports left with small scope for recovery

 

 

US soy exporters will only have a small scope for recovery when they compete against their rival Brazil in the world market, according to Washington officials.

 

The USDA said there was scope for the pace of US export sales of soy to improve, after a 36% slump in the first two months of 2011-12.

 

But an uptick was unlikely "without more competitive prices" which, even after a fall of more than US$1 a bushel below US$12 a bushel in US cash markets last month, were struggling to regain market share from Brazil.

 

Indeed, Brazil's "more competitive" exports, having been sustained far further into the year than normal by a strong 2010-11 harvest, looked set for a rapid comeback given an emphasis on faster-growing varieties in the on-going planting season.

 

By enabling an earlier harvest, these varieties improve prospects for Brazilian farmers to gain strong yields of follow-on crops of corn, whose high prices are signalling to growers "to expand corn area wherever possible".

 

"With a better chance for additional early new-crop harvesting in January, Brazil's soy trade could be quickly put back on a higher path," USDA officials said.

 

"That implies a potentially narrow window for a revival in US exports."

 

The comments follow a forecast from Oil World, the influential analysis group that "world demand for US soy will recover in November and continue to rise in December and January, when most of the South American soy stocks will have been disposed of and South American exports are seasonally small".

 

Meanwhile, data on Thursday showed a near-tripling in US soy sales, week on week, to more than 600,000 tonnes in the week to November 3, beating market forecasts, and welcomed as "encouraging" by University of Illinois farm economist Darrel Good.

 

The USDA comments came in a follow-up briefing to its Wade crop data on Wednesday, which forecast that Brazil would overtake the US to become the world's top soy exporter in 2011-12.

 

However, the briefing was more upbeat on prospects for US shipments of soymeal if only thanks to weak prices, which have been softened strong competition from Canadian canola meal, imports of which "are regularly setting monthly records".

 

"Prices for soymeal compared to other feeds are now unusually low," the USDA said.

 

"This could soon favour the use of soymeal in developing countries where the protein in feed rations has never been quite enough."