Low river levels, S. America threaten U.S. soy, corn trade -Braun

Low river levels, S. America threaten U.S. soy, corn trade -Braun


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NAPERVILLE — U.S. farmers are collecting their soybeans and corn slightly later than usual following slower spring planting, but there may not be a huge rush to deliver the crops to the export market as low water levels on major U.S. rivers could hamper grain movement.

Competitively priced South American offerings have recently undercut U.S. business and the upcoming Brazilian soybean harvest looms large, increasing pressure on U.S. soybean exporters’ performance through the end of the year.

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According to the National Oceanic and Atmospheric Administration, water levels in key locations along the Mississippi River are at or below the low water threshold, and the persistence of drier weather means this issue may worsen in the coming weeks.

Low river levels reduce the number of barges able to access the U.S. Gulf, the busiest export hub for the country’s grain and oilseeds. Slower barge traffic has reduced corn and soybean bids at river terminals this week.

The U.S. soybean harvest is likely picking up this week, so any logistical interruptions are poorly timed. Export inspections during harvest should drastically increase each week, so that data must be watched closely to flag any potential transportation issues.

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Soybean export inspections are already lagging more than expected, having fallen below the range of trade estimates in three of the last five weeks. Last week’s volume was the lowest for the date since 2009, which was one of the slowest-ever U.S. soy harvests.

U.S. exporters have so far sold an above-average volume of soybeans for this cycle and harvest in southern states close to the Gulf is ahead of normal, supportive of shipments in the immediate term.

Just over 60% of annual U.S. soybean exports are typically shipped between October and January, and exports account for nearly half of all use. Concerns over tightening supplies could vanish quickly if projected export volumes keep falling short, jeopardizing seasonally strong U.S. soybean prices.

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Chicago soybean futures are at the second-highest levels for the date, up more than 9% from the July low.

SOUTH AMERICAN PRESSURE

Soymeal prices in top bean buyer China hit all-time highs this week after months of lighter soy imports and rising feed demand from a recovering hog sector. That could increase Chinese buyers’ interest in U.S. supplies in the weeks ahead, but Argentina may have covered some of the gap.

Despite a slowdown in the latest week, a recent flurry of soybean sales by Argentina’s farmers may dampen peak U.S. export volumes in the next couple of months. If Brazil maintains its fast start to soybean planting, early availability of that supply could cut the U.S. shipping season short.

Argentine farmers for the first time in six years may increase soybean area for the upcoming season, potentially boosting output more than 15% on the year. But La Nina could threaten crop yields there for a third consecutive cycle.

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La Nina also impacts Brazil, primarily in southern regions, though the top soybean exporter grew a bumper crop during the 2020-21 La Nina.

U.S. corn sales should be steadily accumulating at this time of year before shipments ramp up around March, but cheaper Brazilian corn is likely curbing U.S. bookings. Brazil’s recent record-large corn harvest has lifted shipments to or near all-time highs in the latest two months.

Continued turmoil for Ukraine’s export program and lower prospects for Argentina’s upcoming corn harvest may increase overseas demand for the U.S. grain early next year, when Brazil’s efforts should cool off.

For now, some analysts are bracing for bleak U.S. commitments. Weekly export sales estimates for the week ended Sept. 22 are 250,000 tonnes on the low end for both crops, which would be the week’s lowest since 2012 for corn and more than a 20-year low for soybeans. Karen Braun is a market analyst for Reuters. Views expressed above are her own.

(Editing by Matthew Lewis)

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