Corn, cotton, soybeans, and wheat were down for the week.

On Monday, soybean futures were up over 20 cents due to harvest weather concerns. On Thursday, abysmal export sales and improved weather forecasts triggered dramatic declines in soybean futures. U.S. soybean exports had remained strong throughout the summer with May through August exports to all countries up 53% compared to 2017.  Substantial year-over-year increases were noted for Argentina (up 204k MT), Vietnam (up 466k MT), Netherlands (up 807k MT), Indonesia (up
300k MT), Egypt (up 598k MT), Mexico (up 343k MT), Taiwan (up 567k MT), Spain (up 277k MT), Iran (up 418k MT), Italy (up 209k MT), and Pakistan (up 598k MT). These increased exports were three times more than the reduction in China’s soybean imports from the U.S. for the same time period (1.384 MMT lower than 2017). Sales to multiple countries is beneficial long term, reducing the reliance on a single export market. However, increased exports to these countries can be largely attributed to low prices compared to South American supplies. Prices in Brazil and Argentina are $1.50-$2.50 per bushel higher than U.S. prices, largely due to Chinese purchases.

The key marketing period for U.S. soybeans is October through February. With low South American supplies, at this time of year, global purchases should favor the United States. However, historically the majority of U.S. soybean purchases and export shipments at this time of year have been made by China. With the 25% retaliatory tariff on soybeans remaining in place, export business to China is likely to be substantially lower than in past years. As such, due to the size of this year’s crop (record U.S.  average yield), alternative export markets will be critical to  maintain/improve domestic prices. Unfortunately, the past two weeks have seen back-to-back disappointing weekly net export sales and it is very unlikely that other countries will be unable to make up for the loss of U.S. exports to the Chinese market. Without substantial improvements in export sales and shipments it will be difficult
for prices to rally. Continue reading at Tennessee Market Highlights.