No Suprise, More Brazilian Beans Hit U.S. Shores

May  28,  2014

What Traders are Talking About:

More Brazilian soybeans hit U.S. shores... Two cargoes of Brazilian beans arrived in the U.S. over the holiday weekend. One shipment carrying 66,000 MT landed in Wilmington, North Carolina, while the other containing 30,000 MT arrived in Norfolk, Virginia. Reuters data shows another 342,000 MT of Brazilian soybeans are either en route, loading or waiting to load for shipment to the United States. Combined with the 130,000 MT of Brazilian soybeans that unloaded in April, Brazilian soybean shipments to the U.S. this spring account for about 20.87 million bushels. There will be more shipments of Brazilian soybeans through June, July and August. But the active shipment of Brazilian soybeans to the U.S. should be no surprise to the market since USDA has record imports of 90 million bu. built into the 2013-14 soybean balance sheet.

The long and short of it: More Brazilian soybeans are on their way. The U.S. needs these Brazilian soybeans this year because domestic supplies are so tight. Plus, it's economically more feasible for crushers and livestock/poultry producers to bring in Brazilian soybeans than to attempt to transport domestic supplies to the Southeast.

More Chinese soybean defaults?... There was talk Tuesday that Chinese buyers had defaulted on another two cargoes of Brazilian beans and an additional five cargoes were held up in ports waiting for letters of credit. Exporters are said to be looking for a new home for these cargoes and the U.S. is the most logical destination. Chinese defaults on Brazilian soybean shipments should also be no surprise.

The long and short of it: This has been going on for awhile now as Brazilian port storage is full and Chinese importers are struggling to get lines of credit given poor crush margins. Chinese lenders are also restricting the use of soybeans as collateral for other business.

Northern Corn Belt made huge planting strides... Finally given the opportunity amid much warmer and drier conditions, producers in the northern Corn Belt made huge strides in planting last week. In North Dakota, corn plantings surged 50 percentage points and spring wheat planting jumped 34 points. In Minnesota, the increases were 28 percentage points for corn and 47 points for spring wheat. In Wisconsin, there was a 31-percentage-point increase in corn plantings. And in Michigan, corn plantings increased 24 points for the week ended May 25. Producers in those four states planted 5.863 million acres of corn last week, but they still had 5.097 million left to plant as of May 25. Producers in North Dakota and Minnesota planted a combined 2.57 million acres of spring wheat last week, but they still had 2.815 million left to plant as of Sunday.

The long and short of it: Not all of the intended corn and spring wheat acres will get planted across the northern Corn Belt this year, but with planting progress across the area getting closer to the normal pace, there no longer is concern about a significant shift in acreage in these states.

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