CHICAGO - The U.S. Department of Agriculture gave old-crop U.S. wheat and soybean exports a boost in its monthly supply and demand report on Wednesday, but corn perhaps should have joined the ranks.
USDA has left its estimate for 2016/17 U.S. corn exports unchanged at 2.225 billion bushels (56.52 million tonnes) since last October. But overseas demand for the yellow grain has been exceptional in recent months, setting the bar fairly low for the remaining three months of the year.
But the enormous South American crop currently coming online could present some hurdles for U.S. corn shippers in the final weeks of 2016/17, and it could prevent U.S. exports from exceeding USDA's target.
In the third quarter of the corn marketing year - March through May - the United States shipped a record 688 million bushels from its ports, crushing the previous best of 635 million set back in 2014. During this period, the world's top corn supplier shipped 31 percent of its expected annual volume, a figure that had been surpassed only twice before - in 2014 and 1987. (http://reut.rs/2ujH8Uj) (http://reut.rs/2uSrUTd)
The heavy third-quarter activity sets up the fourth quarter with a good cushion, which it usually needs because it coincides with the harvest of Brazil's safrinha corn, the second-most exported corn crop in the world.
The South American country is expected to harvest a record-shattering 97 million tonnes this year, a 45 percent increase over the previous year's drought-stricken crop. Brazil's misfortunes one year ago brought fourth-quarter U.S. corn exports to a record volume in 2015/16.
According to data from the U.S. Census Bureau through May, the United States has a cool 454 million bushels left to ship of its 2.225 billion target in the final 13 weeks of the marketing year, and weekly export inspections suggest this goal is nearly 50 percent complete through the first five weeks.
With the exception of one week, corn inspections have routinely landed near the top of or above analysts' expectations since the beginning of June. Weekly inspections are running about 22 percent below the same weeks last year, but the United States is expected to export 35 percent less in the fourth quarter than a year ago.
The progress that U.S. corn shippers have to make in the fourth quarter is pretty low relative to previous years. The 454 million bushels represent 20 percent of the expected annual exports. Within the last two decades, fourth-quarter shares were smaller only in 1997 and 2012 - and in those years, only by a fraction.
The first five weeks of fourth-quarter inspection data suggest that in the remaining five weeks, the United States must ship about 30 million bushels (764,000 tonnes) per week to meet USDA's forecast. And if the realized pace is greater, USDA may need to revise its estimate, whittling away at the ultra-high corn stocks in the process.
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Of the 2.225 billion-bushel export target for 2016/17, the United States still has 36 million bushels (915,500 tonnes) left to sell in July and August.
This means that weekly sales have to average just over 100,000 tonnes in the final nine weeks. This is not an excessive number given the time of year, but the competition from Brazil is becoming stiffer. And if weekly sales do not exceed the needed amount, then none of them can roll over into the new marketing year either - all of the corn sold in the next several weeks would have to be shipped before Aug. 31.
In the week ended June 29, U.S. corn sales plunged to a three-year low of 140,275 tonnes as Brazil's enormous safrinha crop has been making its way on to the market.
Analysts expect that U.S. corn sales for the old-crop marketing year in the week ended July 6 will come in between 300,000 and 500,000 tonnes, which would make great headway toward getting the final sales that the country needs. The data will be published Thursday at 7:30 a.m. CDT (1230 GMT).
Argentina may not offer the United States as much interference as usual despite a record 41 million-tonne crop as estimated by USDA on Wednesday. The corn harvest is a bit delayed due to heavy rains across the main crop belt several weeks back.
But this means that the Argentine competition - and the excess Brazilian supply - will fall against the 2017/18 U.S. campaign that begins Sept. 1 more heavily than normal. USDA has forecast a more modest 1.875 billion bushels for new-crop U.S. corn exports.
Source: Timesofindia.indiatimes.com
