China Shows “Wave of Interest in U.S. Soybean Exports,” as Drought Dents Cattle Herds

Reuters writer Karl Plume reported yesterday that, “China booked its largest single-day U.S. soybean purchases in at least three months on Tuesday, traders said, offering a glimmer of hope for the most valuable U.S. farm export after overseas sales of the 2023 harvest had fallen well behind the normal pace.

Chinese importers bought around 10 cargoes of soybeans, or about 600,000 metric tons, for shipment from Gulf Coast and Pacific Northwest export terminals between December and March, trade sources said.

“The sales would be a relief to U.S. farmers, who have seen Brazil dominate the global export market for soy as well as corn for longer than normal this year.”

Plume explained that, “If confirmed, Tuesday’s sales would be the largest single-day soybean purchases by the world’s top soy importer since late July, according to U.S. Department of Agriculture (USDA) daily sales data.

“They were the latest in a series of soy import deals since late last week by Sinograin, China’s state-owned importer, according to three export traders with knowledge of the deals. Total purchases over that time were estimated at as much as 20 to 25 cargoes, two traders said.”

“The USDA has confirmed private sales totaling 236,000 metric tons of U.S. soybeans over the past two days via the agency’s daily reporting system. Traders expect additional ‘flash sales’ following the deals on Tuesday,” the Reuters article said.

A separate Reuters News article from today reported that, “Chicago soybean futures gained more ground on Wednesday, with prices trading close to their highest levels in two months, as adverse weather conditions in top exporter Brazil and strong Chinese demand underpinned the market.”

And Dow Jones writer Kirk Maltais reported yesterday that, “The USDA reported another flash sale of U.S. soybeans to China Tuesday morning, with China purchasing 110,000 metric tons of soybeans for delivery in the 2023/24 marketing year. The sale follows another one of 126,000 tons reported Monday. China’s wave of interest in U.S. soybean exports is supportive for CBOT futures, although the main factor at play for soybeans is Brazilian weather, said Steve Freed of ADM Investor Services in a note, with some speculating that some replanting of acres needs to take place.”

Meanwhile, Susannah Savage reported yesterday at The Financial Times Online that, “Beef prices in the US have climbed to record highs as droughts in the south and west fuel higher feed costs and force ranchers to cut the national cattle herd size to a 61-year low.

“Average prices of beef sold in US shops and supermarkets have risen to about $8 per pound, topping their previous high of $7.90 reached during the pandemic, according to data from the US Department of Agriculture (USDA).

“Live cattle prices in Chicago are also close to a record, at $1.79 per pound, compared with $1.50 this time last year.

“But ranchers, who would normally thrive on record prices, are instead worried that the prices reflect a growing crisis: years of drought or low rainfall in prime cattle-raising land that is turning green pastures into dust fields.”

The FT article stated that, “According to the USDA, the amount of hay stored domestically as of December 2022 was 71.9mn tons, the lowest level since 1954. With their cows insufficiently fattened, farmers are having to transport hay from further away or send them to feedlots to bulk up their animals earlier in their lives than usual.

“The extra cost for feeds have been compounded by higher global prices of grains that typically make up feed, such as soy, corn and wheat, after Russia’s invasion of Ukraine last year.”