China has been placing record soybean orders with the U.S. but speculation is growing that once Brazil’s record soybean crop becomes available many U.S. orders will be cancelled. Brazil may harvest 90 million tons of soybeans this year – almost 10% higher than last year’s record 81.5 million tons. Last year vessels waited for up to a month to load soybeans at Brazil’s ports because of bottlenecks and logistical issues forcing China to switch its purchases to the U.S. This year because of smaller corn and wheat crops, soybean shipments may go out quicker. Brazil soybean exports are expected to be 45.9 million tons – up 6.7% from last year while corn exports are expected to fall 20% to 18 million tons and wheat exports are to fall by 70% to 500,000 tons. The U.S. could already be overcommitted with 43.5 million tons of soybeans on the books being sold. If no cancellations occur the country would have to import soybeans to meet domestic demand, however the tightness of the U.S. balance sheet will see the market incentivize China to cancel orders.
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