Fundamentally Speaking

How Big a Corn Hike Will Feb WASDE Bring?

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

The latest weekly export corn sales were a blockbuster 292.8 million bushels (mb), likely the largest total by far in history and brings total sales for the year to 2.209 billion bushels (bb) vs. the current USDA estimate of 2.550 bb.

This was actually cut by 100 mb last month in what then, and even so now, is a real questionable move.

This graphic shows U.S. corn export sales and shipments as of the last week in January as a percentage of USDA's January WASDE U.S. corn export projection on the left hand axis vs. the change in USDA's export projection from that January WASDE projection to the final figure in million bushels on the right hand axis.

Also reported in the yellow circles is the spot futures corn price as of February 1st in $/bushel.

The bottom line is that an upward revision seems almost a foregone conclusion in the February 2021 WASDE report this Tuesday, so the question is how much of a hike will be seem from USDA in what could be a gradual process.

Total exports so far this season are 86.6% of the current WASDE projection and over the past 20 years the only time it has been higher was in the 2013/14 season with end of January sales at 1.308 bbn, 90.2% of the 1.450 bb January 2014 WASDE estimate.

Such a strong sales pace just five months in the marketing year did result in the final export projecting coming in 470 mb higher than that January estimate, but the second highest sales pace of 76.1% in the 2007/08 season did not as USDA lowered exports by 13 mb.

We should note that some of the largest increases from the January WASDE estimate to the final export projection seen in 2006, 2014, 2015, 2016 and 2018 all came with at least spot prices quite a bit lower than the $5.40-5.50 region seen today.

Of course, those seasons did not see the voracious Chinese appetite for all sorts of feed grains seen today and supplies from other key exporters such as Argentina, Brazil, Russia and Ukraine are well below what has been seen in the recent past.

Certainly at least a 250 mb increase just to account for last week's Chinese sales seem reasonable.

Finally, though shipments appear rather sluggish, the accelerated soybean shipment pace should alleviate concern about some of these sales not actually being exported, especially if Brazil's second corn crop area gets get pared due to a late soybean harvest.


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