Special Market Update

Grain Market Commentary

Monday, November 13, 2017

By Risk Management, The Andersons

Are USDA Soybean exports overly optimistic?

Last week there were rumors circulating that US DDGs barriers into China could be lifted or eased as President Trump finished his trip visiting many US trading partners abroad. DDGs are used as a protein source in China and if imports of the product came back similar to previous levels it could potentially take a large piece of meal demand away causing bean imports to disappoint longer term.

The soybean balance sheet is already counting on continued buying by the Chinese in the coming year to keep up with heavy supplies in the US as stocks expecting huge demand are near 10 year highs. On top of the potential for DDGs to be imported into China from the US the pace at which soybean exports are leaving the US isn’t justifying the USDA export number. Marketing year to do inspections are running about 12% lower than last year when the USDA expects a small increase year over year. Brazilian lineups continue to remain larger than expected taking away volume from the US.