During shutdown, China and others quietly binged on U.S. grain

China and other big grain importers embarked on a corn and soybean buying spree during the U.S. government’s 16-day shutdown this month, taking advantage of a lapse in mandatory reporting of their deals, data showed on Thursday.

Figures from the U.S. Department of Agriculture, which had halted collection of required weekly grain export sales information during the shutdown, showed purchases in the three weeks to Oct. 24 had far outstripped analysts’ expectations, despite weeks of market chatter about unusually large purchases.

“It does play out the notion that when nobody is watching, the Chinese will be in to buy,” said Citigroup futures specialist Sterling Smith.

Sales of corn and soybeans for the three-week period both topped 4.5 million tonnes, exceptionally high even on a pro rata weekly basis. A slump in prices that took benchmark U.S. corn prices to their lowest in three years probably also spurred buying.

At 9:13 a.m. CDT (1413 GMT), CBOT December corn was up 2 cents per bushel at $4.32-1/4, and November soybeans were up 1-1/4 at $12.88-3/4.

All sales to export U.S. grain must be reported to the USDA on a weekly basis, and larger one-off deals must be reported daily. This system was instituted following the 1972 “great grain robbery” in which the Soviet Union quietly arranged a series of big export deals that drove up U.S. prices.

But that system went on hold during the shutdown. Only on Thursday was the USDA able to release tabulated sales made during the three weeks up to Oct. 24, publishing the data in a single batch rather than as three separate weeks.

TOPPING 4.5 MILLION

Net export sales of soybeans for the current marketing year (2013/14) totaled 4,742,000 tonnes, well above the high end of a range of estimates at 3,000,000 tonnes.

China, the world’s largest buyer of soybeans, bought nearly half of the soy (2,112,300 tonnes), and there was a large sale of 550,800 tonnes to an unknown destination. Mexico, Russia, Indonesia, Taiwan and Japan also bought large volumes.

Corn sales likewise were huge at 4,555,500 tonnes for the current marketing year, nearly twice as large as the high end of 2.5 million in the range of trade estimates.

Mexico accounted for a large purchase of 1,689,400 tonnes and also bought 734,400 tonnes for delivery during the next marketing year (2014/15).

“A big surprise were the very big sales to Mexico,” Smith said. “All in all, these export numbers should provide at least some support to the market.”

Japan also was a big buyer, and China purchased 777,600 tonnes of corn during the three-week period.

“Those are big export numbers, but the market reaction is muted,” a Chicago trader said. “I’m also hearing there was more U.S. corn export business done overnight, and that shouldn’t be too surprising at these low values (U.S. corn prices).”

Chicago Board of Trade corn futures have fallen to the lowest level in three years as U.S. farmers continue harvesting what is likely a record large crop approaching 14.0 billion bushels.

The three-week total for wheat exports stood at 1,308,800 tonnes, below the low end of estimates at 1,500,000 tonnes.

“Wheat sales were about as expected – market neutral,” Smith said.

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