New crop soybean sales are happening at a torrid pace, lending strength to the entire oilseed price complex.
The U.S. soybean industry had forward sold 5.9 million tonnes of the 2011-12 crop as of Feb. 3.
That is almost nine times the 673,000 tonnes contracted at the same time last year and more than 90 times the 63,000 tonnes marketed by Feb. 5, 2009.
It took until the first week of July last year to achieve the current level of new crop sales, which is a strong sign that the unprecedented soybean demand will continue.
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In its Feb. 9 World Agricultural Supply and Demand Estimates report, the U.S. Department of Agriculture said there are record sales through the first five months of the 2010-11 campaign. It expects stronger gains during the second half of the year.
Rabobank has issued a more bullish forecast, saying global soybean production this year will be 253 tonnes, less than the USDA’s 256 million tonne estimate. Rabobank also said Chinese demand for soybeans from all sources is likely to exceed the USDA’s forecast of 57 million tonnes.
A U.S. soybean analyst who requested anonymity said new crop sales are up because China came into the market earlier and bought more crop than usual.
U.S. agriculture secretary Tom Vilsack announced a deal Jan. 25 to sell 2.74 million tonnes of soybeans to China, the largest daily soybean sale in U.S. history.
The analyst said the deal is likely for a much larger volume than that.
“Trade has rumoured that it could be anywhere up to 11 million tonnes that they did in this letter of agreement, but they don’t have to officially report it until it gets priced out,” said the source.
China usually sends a trade delegation to the United States in April, which buys two to three million tonnes of new crop soybeans.
If the sales rumours are correct, it’s a strong signal that China will continue its recent pattern of dramatically increasing U.S. soybean purchases. The country bought 41 million tonnes in 2008-09, 50 million tonnes in 2009-10 and 57 million tonnes in 2010-11.
The analyst said it feels like sales are on pace for another 15 percent increase, which would mean 65 million tonnes of Chinese demand in 2011-12.
“It’s going to be big,” said the source. “I mean, price hasn’t been a barrier at all for them this year buying beans.”
The source expects the unusually high demand for new crop will spur more soybean acres this spring.
