Further cancellations of U.S. soybean orders by China have added to the downward pressure on soybean prices as buyers grow more confident in a bumper South American crop. On Jan. 3, USDA said that private exporters had reported the cancellation of export sales of 315,000 metric tons of soybeans for delivery to China during 2012-13. The cancellation follows Chinese buyers’ cancellation of a total of 840,000 tons of previous U.S. soybean purchases for 2012-2013 during the week before Christmas. Another 120,000 tons of soybeans sold to an unknown destination that was most likely China were also cancelled on Dec. 18.
Crop estimates for Brazil have been inching upward over the past couple of weeks, while drier conditions in Argentina have eased concerns about planting delays in that country.
The U.S. agricultural attaché in Brasilia raised his estimate of Brazil’s 2012-2013 soybean production by 1 million metric tons to 83 million tons in the report dated Dec. 28, but released late on Wednesday. Some private soybean production estimates out Brazil are even higher.
"Crop conditions are rated good across all major producing regions," the attaché said, although he did note that "some isolated areas are receiving less-than-desirable rainfall," resulting in lower crop ratings.
Brazil’s northeast state of Bahia is in the midst of a significant drought, with parts of neighboring Minas Gerais state also affected, but that region is much more important for cotton and coffee production than soybean production. According to CONAB, the supply arm of Brazil’s agriculture ministry, Bahia is expected to produce roughly 4.5% of the country’s 2012-2013 soybean crop, while Minas Gerais is seen accounting for about 4.0% of the crop.