A deep dive into recent US soyabean export data suggests that domestic soyabean supply could be significantly lower this year than the market expects. The recent strong global soyabean demand means that the market will be watching in particular for possible adjustments to US soyabean carryout for both the old and new marketing years.
Impressive domestic soyabean exports in recent weeks have applied extra pressure to the US soyabean supply situation heading into the final month of the 2015/16 marketing year, which ends on August 31. Weekly export data indeed shows that the world's No 2 soyabean supplier is shipping the oilseed at a fast clip, but the weekly data sets might not reflect the complete picture and in fact almost certainly under-represent it.
A close look into all government data reveals that US soyabean exports could be much larger than USDA's latest projection and this could have big consequences for domestic soyabean carryout moving forward. There are three different sets of data issued by the US government in order to track grain exports: inspections, sales and customs. The inspections data tracks the tonnage of grain inspected by federal employees at the ports each week. The sales data is based on the sold tonnage that exporters have reported to the US Foreign Agriculture Service. It also publishes a weekly exported amount but is primarily focused on reporting the sales.
The monthly customs data given by the US Census Bureau is the official record of exports, but there is a lag time in the publication. For example, data through the end of June was made available on August 5. While the market waits for the customs data, it uses the inspections and sales reports for guidance on recent export activity. The inspections and sales reports are issued weekly on Monday and Thursday, respectively.
In theory, all three of these data sets would be very close to one another, and they usually are. But this year, the customs data through June implies that soyabean exports are between 3 percent and 4 percent higher than what the inspections or sales data suggest. For reference, the same deviation last year was less than half a percent.
Representatives responsible for each set of data were contacted and none were able to explain why the historically large discrepancy exists. Most of the speculation pointed to a possible lag in reporting by the exporters or even the failure to report some of the shipments.
But since the customs data has the final word, it must be assumed that total soyabean exports are indeed larger than what the weekly data sets suggest. And given some of the latest inspection numbers, this is very easy to believe. Last Friday, the customs data from the US Census Bureau showed that the United States had exported 45.86 million tonnes of soyabeans through June for the 2015/16 marketing year despite the slower start to the season.
In order to reach USDA's latest figure for 2015/16 US soyabean exports of 48.85 million tonnes, a total of 3 million additional tonnes would need to be shipped in the final nine weeks of the season, averaging out to about 333,000 tonnes per week.
July and August are usually two of the quietest months for US soyabean exports, and inspection data shows that a weekly average over 300,000 tonnes during this time is historically difficult to maintain. But over the last five weeks, weekly inspection data implies that an average of about 617,000 tonnes of soyabeans per week have been shipped, with the most recent week leading the way. On Monday, USDA reported that soyabeans inspected for export in the week ending August 4 totalled a staggering 972,000 tonnes.
Not only do these numbers suggest that soyabean exports have surpassed USDA's July estimate, but maintaining this pace in the final four weeks of the season would add to it an additional 2.5 million tonnes (92 million bushels). And if 2.5 million tonnes of soyabean exports were to be added to USDA's July estimate of 48.85 million tonnes, this would place 2015/16 soyabean exports just over 51 million tonnes. Of course this is considering the most aggressive scenario, but if such large exports were indeed realized, current year soyabean exports would surpass the 2014/15 record of 50.1 million tonnes.
The only area where US soyabean exports are likely to fall short in the current marketing year is in fulfilling all of the bookings. Weekly sales data through July 28 shows that there were still over 6 million tonnes in outstanding sales in 2015/16, more than double what it has ever been at this time.
But unless a large amount of cancellations come in at the last minute, any of these outstanding sales will be rolled to the 2016/17 year and eventually shipped. Cancellations are unlikely at this point since US soyabeans are cheaper than their Brazilian counterpart.
As previously mentioned, maintaining extremely strong exports during August could tack on as much as 2.5 million tonnes (92 million bushels) of soyabean exports to USDA's most recent balance sheet for the 2015/16 marketing year. On average, analysts polled by Reuters believe that USDA will place 2015/16 US soyabean carryout at 320 million bushels (8.7 million tonnes) in Friday's report. This would amount to a reduction of about 820,000 tonnes from the July estimate of 350 million bushels.
The lowest trade estimate for 2015/16 soyabean carryout is 254 million bushels. This would be a reduction of 2.6 million tonnes from USDA's July figure. Assuming that everything else on the current soyabean balance sheet stays the same, these calculations suggest that the average analyst estimate of 2015/16 carryout could be too high depending on how large the potential revision to exports may be and especially if August shipments are very strong.
This means that a sub-300 million bushel carryout in the current marketing year is not only possible but realistic. Even though the lowest analyst estimate for 2015/16 is much higher than 2014/15's carryout of 191 million bushels, it is much lower than what was being considered a year ago at this time.
A lower 2015/16 carryout would mean that the United States will begin the 2016/17 season on September 1 with less supply. USDA's adjustment trend to 2016/17 soyabean exports have been the same as 2015/16 - they have increased each month since the initial projection in May.
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