From the Blog Mishtalk
The Wall Street Journal had an amusing article a few days ago in which analysts bumped up GDP forecasts for numerous reasons including inventories, exports in general, and soybeans in particular.Let’s investigate the claims.
If we assume soybean exports will rise by 100 million bushels from the previous year, and apply all of it to third quarter GDP, at a price of $9.63, soybean exports would add $963 million to GDP.
The entire production increase from last year is only $2.8 billion.
From first to second quarter, Real GDP went from $16,525 billion to $16,583 billion, an increase of $58 billion (seasonally adjusted annualized).
In the Allendale Weekly Export Sales report on 9-22-2016 (for the period September 8-15) we find this blurb. US: Soybean export sales totaled 875,724 metric tonnes (all 2016/17, no 2017/18). This was under the 900,000 – 1,200,000 trade expectation. USDA’s whole-year goal comes to 1.985 billion bushels, a new record. That would be 2% over last year and 22% over the five year average.
Amusingly, corn seems better.
US: Weekly export sales for the period from September 8 – 15 were released this morning. Corn export sales totaled 921,903 metric tonnes (all 2016/17, no 2017/18). This was just over the 700,000 – 900,000 trade estimate. USDA’s goal for the year, at 2.175 billion bushels, would be a record. It would be 14% over last year and 36% over the five year average. With only two full weeks figured of the new crop year done, our total sales come to 707 million bushels, 84% over last year and 43% over the five year average. Due to good pre-September sales, we are ahead of the pace needed.
In September, only the incremental export increase (if any) from August will add to 3rd quarter GDP. We had a huge jump from July to August, is another huge jump coming? A reversal actually seems more likely.
Regardless, the notion that soybeans or corn exports (corn at $3.48) will add 1% to 3rd quarter GDP is ridiculous. The whole thing can be found here.