Soy traders continue to talk about tight U.S. supplies and the fact Brazilian export shipments are still running below last years pace. March estimates show Brazil only exporting 5.1 million tons, 200,000 short of what they shipped last March. Brazil's soymeal shipments are extremely poor; some are now estimating close to 40% below last years pace for the first few months. The point is: Brazil continues to struggle with soy exports, continually falling below expectations. The bears will argue that the situation in Brazil is starting to improve and that they could actually export a new record amount during the month of April (possible 5.5 to 6.0 million tons).
The bears are also talking about the fact China is importing fewer soybeans – which is actually correct when comparing the data from last year. Last March between Brazil and the U.S. we shipped China around 4.9 million tons of beans; this year it was closer to 4.2 million tons. Bottom line: Chinese demand continues to fall further behind the USDA's 63-mmt estimate. I'm not saying Chinese demand won't soon pick-up, but as of right now it has some serious catching up to do. The market is concerned about more South American supplies coming online, record U.S. soybean acres being planted and the thought that Chinese soybean demand may NOT be increasing as fast as many had anticipated. Keep in mind Chinese pork demand is wavering right now in China with the mystery pig deaths. In return, hog margins remain negative and meal demand is soft. Net-net, it's not a real pretty picture for new-crop soy on the horizon.
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