The U.S. Department of Agriculture’s (USDA) weekly export inspections report indicates a decline in United States grain exports. A market strategist analyzes this week’s report and discusses what producers watch for moving forward.
Soybean futures on Monday suggested stellar sales. However, Zaner Group market strategist Brian Grossman says that is not the case.
“Coming in a hair short of what we need on a weekly basis to reach the USDA target. It reported 688,000 metric tonnes, and we need 703,000 (metric tonnes) each week to hit target. All-in-all not bad, but we definitely want to see a little bit more coming from that,” Grossman said.
Export inspections for corn came in strong at 1.5 million metric tonnes, while inspections for wheat came in weak at 404,000 metric tonnes. Grossman says wheat export inspections are concerning, as the marketing year comes to an end soon.
Grossman calls the lower inspections “a little unusual,” adding they are well below the five-year average.
“Typically, we have more sales and shipments already out the door,” Grossman said. “It’s normal to see the tapering off, but it’s not normal for us to be this far behind. That’s the biggest concern at this point. The potential is there, but I don’t know about the probability.”
Grossman reminds producers: “Exports are a big portion of our overall demand.” He hopes to see export demand pick back up, but adds weather events will drive grain markets in the meantime.
“If we struggle to make sales, that is likely going to put some pressure back onto the soybeans,” Grossman said. “Beans are hanging in there quite well (as) they have some weather issues. As we know, Argentina burned up. The Brazilian crop – what appears to be getting larger – is still questionable. The good thing is that Brazil is good at using their inventories. Every year, they typically run their supply down to zero. Our demand could come back if Argentina’s crop is worse than expected. But we are in that timeframe when things normally slow down.”