Steep Prices Trim U.S. Grain, Oilseed Exports Despite Healthy Demand

Global agriculture demand has been respectable even as shrinking supplies have pushed prices to multiyear or even record highs, but the recent shortfalls in some key U.S. exports are a prime example of how U.S. products have been frequently priced out of the market when costs soar.

U.S. farm exports recently hit new highs in terms of value, but wheat, soybean oil and cotton volumes in particular have lagged. Current U.S. government export estimates largely capture these weaknesses for now, but improvements may be less likely the longer high prices stick around.

The United States in October exported $19.08 billion worth of agricultural and related products to all destinations, an all-time high for any month. That is according to data published on Tuesday by the U.S. Census Bureau.

That includes a new monthly record to China of $5.52 billion, some 7% above the previous high set in November 2020. October exports to all other destinations totaled $13.6 billion, the second-best after March 2021.

By October, prices for top U.S. exports corn and soybeans had come down from more elevated levels earlier in the year, but wheat’s cost jumped near nine-year highs, and the impact became clear.

October U.S. wheat exports reached 1.22 million tonnes, the lowest for any month since January 1972, just before the infamous Great Grain Robbery. That put total wheat exports for the first five months of 2021-22 at 10.2 million tonnes, the fifth-worst post-Robbery. (https://tmsnrt.rs/3Gs4CaN)

October and November are typically the lightest months for U.S. wheat shipments due to the big soybean efforts, and last month’s numbers likely stayed true to that trend. U.S. wheat sales are currently challenging six-year lows for the date.

Top wheat supplier Russia last week was discussing a mid-February-through-June grain export quota 20% below last year in order to control domestic food inflation. Russian restrictions, or even ideas of them, often lead to optimism over U.S. potential.

But Russia’s 2021-22 wheat exports to date are already more than 35% below last year’s volume, evidence that high U.S. prices have been prohibitive despite the world’s supply crunch. European and Australian exporters have had better luck.

COSTLY OIL

Global vegetable oils have been in high demand, but U.S. soybean oil has recently gotten too pricey, and exports have plunged. U.S. soyoil exports in October, the first month of 2021-22, were just below 26,000 tonnes, the lowest for the month since 2000. (https://tmsnrt.rs/3DGMDeN)

That is the fourth straight month of abnormally low volumes. July-October exports were near 69,000 tonnes, the smallest for that period since 1975 and almost 80% off the five-year average. U.S. export prices for the latest five months were the highest ever recorded.

U.S. soybean oil stocks dipped below averages mid-year after the crushing pace cooled, but a record effort by U.S. soybean processors in October helped oil stocks rise well above normal. Commitments last month began their climb off eight-year lows led by two huge sales to India, and shipments surged to nine-month highs near the end of November.

Top soyoil exporter Argentina also had depressed shipments in recent months, but No. 2 supplier Brazil’s exports have reached multiyear highs over the same time frame partially owing to a massive soybean harvest earlier this year. Brazil’s weak currency is another factor in its export advantage.

Brazil’s edge has also manifested in cotton, as last year’s poor crop did not prevent a boost in exports. However, U.S. cotton exports in October were just short of 100,000 tonnes, the smallest for any month since November 2015. U.S. cotton shipments were strong last year despite a short crop, and the big difference with this year is the price.

U.S. cotton sales sit at five-year lows for the date. The United States is the top cotton supplier and Brazil is second.

STAPLES

October’s overall U.S. export success, especially to China, was driven by soybeans. The oilseed’s export cost in October reached an eight-month low but an eight-year high for the month, and the sheer volume was enough to safely shatter records in terms of value.

But total October soybean shipments of 10.5 million tonnes were 10% off last year’s high for the month and the third-largest October volume on record. If November exports neared 10 million tonnes, first-quarter shipments would land 24% below a year ago and below recent non-trade war averages.

That is dragged down by an extremely poor September after U.S. export terminals suffered hurricane damage, so it is possible for December or January to offset some of those losses. A recent string of U.S. soybean sales to China and unknown buyers may support that, especially considering that the heaviest buying last year occurred between July and September.

October corn shipments at 3.8 million tonnes were 4% above last year and 6% above the month’s five-year average, and November should follow with above-normal volumes.

However, U.S. corn shipments to China are decreasing, as the October total of 280,266 tonnes was the lowest since June 2020. At least 10 million tonnes of purchased U.S. corn await sailing to China.

(Reporting by Karen Braun; Editing by Matthew Lewis)