Export sales are a good thing, but they aren’t the only thing, says Ted Seifried, chief market strategist with the Zaner Ag Hedge Group. That’s because export sales don’t always add up to shipments, he says.
"Export sales are a commitment from another country to buy U.S. grain during a certain marketing year," Seifried says. "As we saw last year with soybeans, sales do not always equate to shipments. Countries will make a purchase to be shipped at a later date with the idea that they have a price locked, in case prices go up. However, if prices go down, many countries will cancel or defer shipments."
It’s a good reminder that the deal is not done until the grain leaves the port, Seifried says. What’s happening currently in wheat is a model example of how a strong export market is supposed to look, he says.
"If you look at the breakdown of sales versus shipments, you will see that of the 768.2 million bushels of wheat sold for the current marketing year, 576.3 million bushels have been shipped [as of Oct. 31]," he says. "This means that sales are being made and shipments quickly follow—there is a real need for the grain that was sold."