Low river levels, South America threaten U.S. trade in soybeans and corn – Braun
U.S. farmers are harvesting their soybeans and corn a little later than usual after slower spring plantings, but there may not be a rush to deliver crops to the export market as Low water levels on major US rivers could hamper the movement of grain.
Competitively priced South American offers have undermined US business recently and the next Brazilian soybean crop is looming, increasing pressure on US soybean exporters’ performance through year-end.
According to the National Oceanic and Atmospheric Administration, water levels in key locations along the Mississippi River are at or below the low water mark, and continued drier weather means this problem could worsen in the coming weeks.
Low river levels reduce the number of barges able to access the United States Gulf, the nation’s busiest grain and oilseed export hub. Slower barge traffic reduced corn and soybean supplies at river terminals this week.
The U.S. soybean harvest likely resumes this week, so any logistical disruption is poorly planned. Export inspections during harvest are expected to increase significantly each week, so data should be closely monitored to flag any potential transport issues.
Soybean export inspections are already behind schedule, having fallen below the range of trade estimates in three of the past five weeks. Last week’s volume was the lowest for the date since 2009, which was one of the slowest U.S. soybean crops on record.
U.S. exporters have sold above-average volume of soybeans so far for this cycle and the harvest in southern states near the Gulf is above normal, supporting near-term shipments.
Just over 60% of annual U.S. soybean exports are typically shipped between October and January, and exports account for nearly half of all usage. Concerns about tight supply could quickly fade if forecast export volumes continue to decline, jeopardizing seasonally high U.S. soybean prices.
Chicago Sv1 soybean futures are at the second-highest level for the date, up more than 9% from the July low.
SOUTH AMERICAN PRESSURE
Soybean meal prices in major bean buyer China hit historic highs this week after months of lighter soybean imports and increased demand for feed from a pig industry in recovery. This could increase Chinese buyers’ interest in US supplies in the coming weeks, but Argentina may have covered some of the gap.
Despite a slowdown over the past week, a recent surge in soybean sales by Argentine farmers may dampen the spike in U.S. export volumes over the next two months. If Brazil maintains its rapid start to soybean plantings, the early availability of this supply could shorten the shipping season to the United States.
For the first time in six years, Argentine farmers could increase the acreage devoted to soybeans for the coming season, potentially increasing production by more than 15% year on year. But La Nina could threaten crop yields there for a third consecutive cycle.
La Nina is also impacting Brazil, mainly in southern regions, although the major soybean exporter had a bumper crop during La Nina 2020-21.
U.S. corn sales are expected to build steadily this time of year before shipments pick up around March, but cheaper Brazilian corn is likely to dampen U.S. bookings. The recent record corn crop in Brazil has pushed shipments to near or near historic highs in the past two months.
Continued turmoil for Ukraine’s export program and weaker prospects for Argentina’s upcoming corn crop could increase foreign demand for U.S. grain early next year, when efforts by the Brazil should calm down.
For now, some analysts are bracing for gloomy US commitments. Weekly export sales estimates for the week ended Sept. 22 are a low of 250,000 tonnes for both crops, which would be the lowest for the week since 2012 for maize and more than 20 years for maize. soy.
Source: Reuters (edited by Matthew Lewis)