U.S. corn exports falter, soybean business could meet same fate

Fort Collins | Reuters – It is no secret that overseas demand for U.S. corn has been downright terrible as of late, and relief does not seem likely in the immediate term as purchase commitments remain dismal. Forward sales for U.S. soybeans are nothing to brag about either, but soy exporters have enjoyed more success recently than those for corn.

The United States exported 3.89 million tonnes of soybeans in September, according to data published Tuesday by the U.S. Census Bureau. That is 17 percent more than in the previous year and the second-largest ever for the month, behind 4.5 million tonnes in 2017.

This follows a string of monthly soybean export records set in June, July, and August, and that was mostly due to heavier activity for China than is typical for the time of year.

Some 966,626 tonnes of soybeans were shipped to top buyer China, making up 25 percent of the monthly exports, and that was both the lowest monthly volume and share of total since April.

According to weekly export inspection data from the U.S. Department of Agriculture, October soybean shipments likely came in just over 5.8 million tonnes, some 7 percent more than a year earlier and potentially the largest monthly total since December 2017.

About 1.6 million tonnes of the October exports went to China, with the bulk of the activity occurring in the final two weeks of the month. This implies that shipments to all other destinations likely surpassed 4 million tonnes for only the fourth month in history.

But the forward book remains thin compared with previous years. As of Oct. 24, total U.S. soybean sales for the 2019-20 marketing year stood at 19.27 million tonnes, the lowest for the date since 2011. The marketing year began Sept. 1.

Sales to China are up more than five times versus the year-ago volume, but all other purchases are down sharply from last year’s record, when the trade war with China put U.S. soybeans on sale to the rest of the world.

Non-China sales, including unknown buyers, were at 13.1 million tonnes as of Oct. 24, down 36 percent on the year and the lowest for the date since 2015. Mexico is the largest buyer in that group with 2.5 million tonnes booked as of Oct. 24.

The Oct. 24 export sales report also suggested that 11.3 million tonnes of soybeans purchased for 2019-20 had yet to be shipped, down from around 14 million a year ago. However, the previous four-year average is 21.5 million tonnes.

Corn troubles

U.S. corn exports totaled 2.03 million tonnes in September, the smallest volume for the month since 1975 and the smallest quantity for any month since November 2015.

Export inspections data implies that October corn shipments may have been slightly better than in September, but not by much. The October projection would put shipments for the first two months of the 2019-20 marketing year slightly ahead of those for the 2012-13 year, which was the lightest start since 1974-75.

U.S. corn merchants had sold 11.41 million tonnes of corn as of Oct. 24 for delivery in 2019-20, just 5 percent above the same point in 2012, which featured one of the worst U.S. crops in history. Other than that, 2019 sales are the smallest since at least 1999, as far back as records extend.

U.S. corn business has been hammered in recent months by abundant and cheaper-priced supplies in competitor countries. A record-large crop in Brazil has led to unprecedented corn exports in recent months.

From July through October, Brazil shipped 26.6 million tonnes of the yellow grain, some 44 percent more than the previous high for the period set two years earlier, after what was also a record harvest. Exports out of Argentina and Ukraine have also set records this year.

USDA’s latest target for 2019-20 U.S. corn exports is 1.9 billion bushels (48.3 million tonnes), equivalent to the volume from 2015-16, but down nearly 16 percent from the latest three-year average. USDA has also reduced its outlook by 16 percent for the current year since its initial forecast in May, but some analysts question whether more cuts are needed.

USDA’s 2019-20 soybean export outlook is 1.775 billion bushels (48.3 million tonnes), up about 2 percent from last year but down 15 percent from the previous three-year average. The agency has reduced its estimate by 9 percent since May.

Market participants may have a weaker bias on soybean exports than those for corn because of the uncertainty around future trade with China. USDA will have an opportunity on Friday to adjust all forecasts further if needed.

Other September notables

The United States exported 2.29 million tonnes of wheat in September, bringing total shipments to 8.96 million tonnes for the 2019-20 marketing year that began June 1. That volume is in line with the recent five-year average.

USDA has 2019-20 wheat exports up 5 percent over the recent five-year average, and the first four months accounted for 35 percent of the annual target. Export sales as of Oct. 24 had reached 14.6 million tonnes, a shade above the recent five-year average for the date.

U.S. pork shipments have been elevated in recent months due to the meat shortage in China caused by African swine fever. Through September, total exports for the year had hit a record 1.9 million tonnes for the period. Some 28 percent of that has gone to Mexico and another 18 percent was sent to China.

However, when removing China’s exports, pork shipments to all other destinations through September were down 4 percent on the year. Export data from the weekly export sales corroborates this notion, and although export sales do not include the full gamut of pork products as does the Census data, they imply that some 84 percent more pork is still left to be shipped this year versus last year as of Oct. 24.