Market observers see reduced Chinese soybean import demand
Recent rains in Argentina improved water supplies and brought relief in the Cordoba and Western Buenos Aires regions. However, there are still pockets of dryness and, if this continues, it will hinder yields, according to the latest market report from AHDB.
Brazilian company, Mercosul, has already cuts its soybean forecast down to 128.34Mt from 129.15Mt in their previous outlook, said the grain and oilseed UK specialists.
Meanwhile, after a five-month soybean purchasing spree, there are signs that Chinese demand may be starting to wane, they also noted.
“It seems that some small importers and processors are looking to cancel US cargoes for December and January shipment.”
Weekly export sales of soybeans from the US have reduced, they reported. Sales last week were down to 768.1Kt, the lowest weekly amount the marketing year started on October 1, according to the US Department of Agriculture (USDA).
But in terms of the grains outlook, US wheat export sales for week ending November 19 were 795.7Kt, well above trade expectations of between 200Kt to 450Kt, said the analysts.
“Strong Chinese buying was a theme again last week, which has reportedly been supporting European wheat prices. Despite the EU having a smaller wheat crop this year, the effects of COVID-19 on demand is thought to have added to the exportable surplus. EU common wheat exports are 20% behind the same period last year but this gap could shrink if the recent sales that have been reported, especially to China, are actually shipped.”
Dry conditions in Brazil have led to the yield estimate for the first maize crop of the season being cut by the consultants Safras & Mercado, found the AHDB review.
Those consultants now have the first Brazilian maize crop pegged 18% lower than 2019/20 levels - at 19.1Mt. Earlier this month, Conab forecast the first maize crop at 26.4Mt.
Last Thursday, November 26, the International Grains Council (IGC), in its most recent outlook, paired back its projections for global maize output in the 2020/21 season but doubled its forecast for China’s corn imports from 8Mt to 16Mt.
The Council cut its global corn crop forecast by 10Mt to 1.146bn tons, citing worse outlooks for maize crops in the US, Ukraine and the EU.
The body also raised estimates for world wheat production but only by 1Mt, estimating that output for 2021/21 at 765Mt.