Trade is closely monitoring U.S. soybean sales, mainly those in the unshipped category. The U.S. currently has 429 million bu (mbu) of unshipped soybean sales on the books. This is 32 percent more than last year at this time and the fourth largest total on record. The concern is that of these sales, 357 mbu are with China and unknown buyers who trade assumes to be China as well. Given the wide price spread between the U.S. and South America on soybeans, it would not come as a surprise to see a portion of these shifted on origination points. This would greatly impact U.S. soybean balance sheets and is a primary reason soybean futures have struggled in recent weeks.

Trade is also closely watching soy product demand, mainly on oil. U.S. soy oil exports currently total 183.4 million pounds, well under last year and the lowest volume for this date on record. While this is negative for the market, the increase we have seen to renewable fuel production has offset a portion of the export losses. The United States currently has a renewable diesel production volume of 2.37 billion gallons. This is an increase of 136 percent from last year at this time. There is another 2.78 billion gallons of production capacity under construction. The question now is if exports pick up, will there be enough soy oil to cover all future needs.

While the United States has seen a build in export demand on corn in recent weeks, it is still questionable if we will meet current USDA yearly projections. It was thought the United States would be a main source of corn for the global market by now, but this has not happened. This is mainly from the fact the U.S. competitors in the global market have continued to make sales and shipments of product.

The main one of these is Brazil, which exported 6 million metric tons of corn in January and is expected to load out another 2.4 million metric tons this month. Analysts had though Brazil would have depleted its corn inventory by now. This export pace gives trade the indication that last year’s corn inventory in Brazil was larger than expected.

he United States will still see better demand for its corn offers in the near future, but the window for sales has definitely shrunk.

Domestic corn demand is also questionable at this time. Year-to-date ethanol demand is down 5 percent from last year in the United States as total gasoline consumption remains depressed. In order to meet current USDA expectations, ethanol corn demand will need to be near record for the remainder of the marketing year.

Feed demand on corn is also likely too high at the present time. The USDA is currently projecting a year feed consumption of 5.275 billion bu. While this is down a large 443 million bu from last year, animal numbers on feed continue to decline, which will reduce demand. The United States is also seeing elevated wheat feeding as that rain remains at a sizable discount to corn and wheat’s higher protein will reduce the need for supplements. The most demand loss may be from improved pasture conditions in the U.S. Plains if timely rains develop as forecast.

The most pressure the United States is seeing on soybean exports right now is from Brazil, which is not surprising given the start of that country’s harvest. Brazil is currently offering soybeans at an 80 cent per bushel discount to the United States. Soy meal from Brazil is being offered at $25 per ton less than the United States. Argentina is even cheaper on meal with a $40 per ton advantage. Not only are these offers under the U.S., but product availability is greater, which is more of an incentive for some importers. Even with production losses in Argentina, total South American soybean production this year will be nearly 21 million metric tons greater than a year ago. This will allow those suppliers to offer soybeans at a lower value for a longer period, cutting demand for U.S. offers.

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