From September 2018 to June 2019, USDA lowered their 2018/19 U.S. soybean export projection by 360 million bushels to what would be the lowest level seen since 2013/14 – 1.7 billion bushels. The July 2019 WASDE report maintained this forecast for substantially reduced soybean export sales due to U.S. trade conflicts with China.  The 2018/19 soybean export projection is down 20 percent from the volume exported last year (2.129 billion bushels).

Although recent trade data indicated 54.95 million bushels were added to the May shipments, total U.S. soybean shipments (accumulated sales) to all countries by the 44th week of the marketing year (July 04, 2019) were down 23 percent year-over-year to 1.416 billion bushels (see Figure 1). Shipments to China by July 4th were 321 million bushels, down 68 percent from last year when 1.008 billion bushels were exported from the U.S. to the world’s largest soybean importer (see Figure 2). By the 44th week of the marketing year, most U.S. soybean shipments to China had ended in prior years. 

U.S. soybean total outstanding sales as of July 4, 2019 were estimated at 370 million bushels (see Figure 1). Outstanding sales are export sale contracts that have not already shipped at any given time during the marketing year, and are subject to change. This marketing year, China’s share of total outstanding sales is 57 percent (210 million bushels), compared with 10 percent last year (26 million bushels) (see Figures 3 and 4). A factor that may result in delays or cancellations of U.S. soybean outstanding sales to China during the balance of this marketing year include weakening crush margins in China due to reduced swine feed demand resulting from the outbreak of African Swine Fever (ASF) in China.

Although not replacing all of the reduced soybean export volumes shipped to China in recent years by the 44th week of the 2018/19 marketing year, U.S. soybean total shipments to the rest of the world (other than China), were up 30.4 percent year-over-year to 1.095 billion bushels. Shipments to the European Union (EU) have increased 74 percent compared with last year – reaching 270 million bushels (see Figure 5).  Other leading markets for U.S. soybean exports this year are Mexico, Egypt, Japan, and Indonesia.

U.S. soybean shipments to the rest of the world are proceeding at a better pace than last year. As of July 4, 2019, outstanding sales to the rest of the world, were estimated at 160 million bushels, whereas at this time last year there were still 237 million bushels of outstanding sales (see Figures 3 and 4). After China, Mexico is the country with the most currently reported outstanding sales with a volume of 30 million bushels, which is the same amount as last year.

In order to reach the current USDA export projections for soybeans, export shipments need to average 35.3 million bushels per week through the balance of the marketing year.  As of July 18, 2019, there are 314.5 million bushels of outstanding sales, or enough to meet/exceed the USDA’s export projection of 1.7 billion bushels if all the outstanding sales are shipped.  But that is not likely.  In the most recent week, 2.87 million bushels of outstanding sales were cancelled and further cancellations of existing sales or deferment of existing sales to the next marketing year are likely.   Further sales and shipments must contend with declining feed demand in China, competition from Brazilian soybeans, and a strengthening U.S. dollar which makes U.S. exports less competitive in international markets.  

A further sign of weakening world demand for soybeans was the reduction of USDA’s July projection for 2019/20 U.S. soybean exports to 1.875 billion bushels, down 75 million bushels from the previous month’s projection, indicating reduced supplies and strong competition from South American soybeans, mainly Brazil.

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S. Patricia Batres-Marquez, Senior Research Analyst, Decision Innovation Solutions (DIS). DIS is an Iowa-based economic research firm which provides regular farm economic research for the Iowa Farm Bureau Federation.