China Agriculture View

* Little impact on US corn, soy exports amid dollar bounce

* Cancellations seen no more than in typical years

* South American infrastructure to be tested by big crops

CHICAGO, Feb 11 – A resurgent U.S. dollar is unlikely to trigger mass cancellations of U.S. corn and soybean purchases in favor of South American supplies despite sinking prices in Brazil and Argentina due to huge crops.

Any decision to scrap U.S. sales currently on the books will hinge more on whether the South American countries can reliably load and ship more than their usual volume of grain to meet rising world demand, traders and analysts said.

Both Brazil and Argentina, the world’s top corn and soybean exporters behind the United States, are expecting record-large soy crops and bumper corn crops this year.

“There are big crops coming out of South America which will compete against the U.S. this summer as soon as they are readily available. But we’ll have to wait and see how they can handle the big export programs for corn and soybeans from a logistical point of view,” said Shawn McCambridge, analyst with Prudential Bache Commodities.

Poor roads, old trucks and reoccurring farmer protests in Argentina all threaten to slow the movement of crops.

“We could see some cancellations of what’s on the books already, but I just don’t think that it will be anything more than we see in a normal year,” he added.

The dollar climbed to a seven-month peak against a basket of major currencies last week, making dollar-denominated commodities more expensive for those holding other currencies.

But a substantial drop in corn and soybean prices coincided with the greenback’s climb, more than offseting the currency’s negative impact on exports. Corn futures have fallen 14 percent and soybeans by 7 percent since the release of a key U.S. Agriculture Department crop report on Jan. 12.

“We’ve seen some strengthening in the dollar, but we’re still near these historical lows. Maybe at the margin it makes some slight difference, but I don’t see it as being a huge game-changer in the export world,” said Marty Foreman, analyst with Doane Advisory Services.

“If you go back and try to correlate exports with changes in the dollar, it’s pretty hard to find much,” he said.

PENDING SHIPMENTS

One reason traders have been nervous about the huge South American crop is that the United States still has to ship 9.4 million tonnes of soybeans by the end of the marketing year on Aug. 31, 47 percent more than at the same point a year ago.

Nearly 12 million tonnes of U.S. corn remain unshipped, 39 percent more than last year.

But shipments as a percentage of total sales are only slightly behind last year, with 73 percent of total soybean sales shipped and 60 percent of corn sales shipped, according to U.S. Agriculture Department data.

U.S. soybean export shipments were expected to remain brisk through mid-March, which should take soybean shipments to more than 80 percent of total sales, before freshly harvested South American soy floods the market and U.S. shipments slow.

The second half slowdown in soy shipments will free up U.S. port capacity to load more corn.

But some analysts warned that cheaper South American corn may undercut U.S. sales if China’s demand for imported soybeans slows and frees up port capacity in Brazil or Argentina.

“It may come down to the value of the elevation,” said one U.S. corn trader. “If South America has less capacity to load corn, that could keep our corn sales up here.”

Importers are also keenly aware that disputes between Argentina’s farmers and government over farm export taxes often delay grain and soybean deliveries during harvest. That uncertainty supports typically benefits the far more stable U.S. export market.

The big influx of supplies, which have already begun to arrive at some Brazilian ports, are sure to put South America’s grain handling infrastructure to the test this year.