Wasde: Higher exports to China offset larger 2020/21 production

Higher soybean exports to China and a slightly firmer domestic crush will offset a chunky 16% rise in production next year to leave US ending stocks at a three-year low, the USDA said Tuesday, in its first estimate of the 2020/21 soybean campaign.

Publishing the much-awaited May Wasde, the agency did little to surprise the market, estimating production to reach 4.125 billion bu (112 million mt), up 568 million bu on last year’s washout crop.

That figure was bang in line with market expectations, but a 22% hike in exports to 2.05 billion bu and a slight increase in consumption to 2.05 billion bu will leave ending stocks by August 2021 at 405 million bu – the lowest in more than three years and broadly in line with analyst estimates.

“With higher global soybean import demand for 2020/21 led by expected gains for China, US export share is expected to rise to 34 percent from the 2019/20 record low of 30 percent,” the report said.

In metric terms, US exports are set to reach 55.79 million mt in the 2020/21 campaign, 10 million mt higher than the revised figure of 45.59 million mt for this year, which was cut by almost 3 million mt from 48.31 million mt amid a largely disappointing export campaign so far.

The rise in forecast exports on the basis of a positive trade relationship with China, or “jam tomorrow” as some might say, may yet be seen as overly bullish given talk over the last 24 hours about China wanting to renegotiate the trade deal.

On the international front, the global carry out for the 2019/2020 marketing year was largely left unchanged at just over 100 million mt, although that is now expected to decline slightly to 98.4 million mt for the 2020/21 marketing year as China increases imports to 96 million mt from 92 million mt this year.

That figure was 2 million mt than China’s own estimate released earlier today and seemingly discounts what China believes maybe efficiency improvements at its meat plants.

Finally, in the somewhat speculative world of guessing what South American crops will be before they have even been planted, the USDA expects Brazil to produce a whopping 131 million mt, up 7 million mt on the year, and Argentina 53.5 million mt, up 2.5 million mt.

Soybean futures were broadly unchanged on the news.