Fundamentally Speaking

More Upside Potential for Corn or Soybean Exports?

Joel Karlin
By  Joel Karlin , DTN Contributing Analyst
Chart by Joel Karlin, DTN Contributing Analyst

Feeding into what are tightening global corn and soybean supplies is the fact that early season dryness in Brazil has delayed the start of their planting season.

Soybean seedings in top producing state Mato Grosso were only at 8.2% complete last week, up 5% vs. 42% done last year and the 38% average.

This is seen keeping U.S. beans competitive into the February time slots.

Meanwhile for corn, we have seen some balance sheets that have at least 300 million bushels (mb) more in exports penciled in and that would bring ending stocks down to 1.867 billionn bushels (bb) assuming no further change in demand or supplies, though one must contemplate a possible small cut in production from further downward adjustments in harvested acreage and/or yield and whether the USDA cut in feed/residual use earlier this month was justified.

This graphic shows U.S. soybean and corn sales as of the second week of October in million bushels on the left-hand axis and as a percent of the USDA's October WASDE export estimate on the right-hand axis.

The 1.589 bb of soybeans sold as of the second week in October is the most ever for this time of year and is now 72% of the 2020/21 2.20 bb total soybean export projection, also the highest percent of the USDA's October WASDE forecast.

This would imply the USDA is too low on is current overseas sales projection, so the question is by how much?

One also has to wonder about the scope for any further upward revisions given that the 2020/21 carryout is already down to 290 mb, assuming there is no further modest cut in the 2020 U.S. soybean yield and/or an upward revision in the projected crush figure.

The 1.043 bb of corn sold as of the second week in October is the most ever for this time of year and is now 45% of the 2020/21 2.325 bb total corn export projection already on the books just five weeks into the new marketing year, though it does appear that in the 2011/12 season the percent was even higher at 49.5% and in 2013/14 at 47.9%.

Does a strong early season corn export sales pace auger for further export hikes?

In the 2011/12 season final sales actually fell by 57 mb from that October 2011 WASDE projection to the final figures that year but in the 2013/4 season final exports were actually 608 mb higher.

One difference between corn and soybeans is that China has not been a huge buyer of U.S corn in recent seasons as over the past few years they have had more than adequate supplies, but this year of the 1.043 bb sold, China has accounted for a huge 398 mb, by far their most ever and a whopping 38.2% of all sales.

There is no year comparable as we are really in new territory with regard to PRC corn purchases from the U.S.

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