December 19, 2023


US soybean exports face slowdown despite demand


Recent figures from the United States Department of Agriculture revealed a notable decline in soybean export inspections, reaching a 10-week low of 984,410 metric tonnes for the week ended December 7, 2023, Reuters reported.


This dip, reminiscent of the US-China trade war in 2018, has raised concerns despite respectable sales, as drought-related delays in Panama Canal traffic could pose a significant hurdle extending into 2024.


While the current US soybean export programme isn't immediately in jeopardy, the deviation from the typical pace of the past couple of weeks is raising eyebrows. USDA projections anticipate a four-year low in total 2023-24 US soybean exports, down 12% from the previous year, contributing to inspections lagging behind normal levels for nearly two months.


The anomaly is evident in the latest two weeks, where soybeans constituted approximately 43% of all inspected grains and oilseeds, notably lower than the average of around 60%. The Panama Canal delays are a key factor, potentially impacting US Gulf exports, a crucial route to Asia.


Inspection data doesn't indicate a significant shift in soybean volumes at the Gulf, with ports accounting for 49% of all US soybeans inspected in the week ending December 7. Although this matches figures from 2022 and 2017, it falls below the average of around 56%.


Moreover, Pacific Northwest ports haven't compensated for the decline, maintaining a 29% share of all soybeans inspected last week, consistent with the week's average.


From a sales perspective, US soybean export projections seem in line with expectations. As of November 30, 68% of the USDA's full-year target had been sold, a figure similar to the same dates in the past two years. A noteworthy trend emerged in November, marking the first instance since 2007 where the volume of unshipped soybean commitments increased, raising cautious eyebrows.


While the volume of outstanding soybean sales and the cumulative exports-to-total sales ratio remain within normal ranges, continued growth in the unshipped ledger without a corresponding surge in shipments could become concerning.


Adding to the complexity, US grain vessels are increasingly opting for the Suez Canal route to Asia over the Panama Canal, elongating delivery times and raising costs. This shift potentially places US soybean orders at risk of cancellation in favour of upcoming Brazilian supplies.


-      Reuters

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