Fundamentally Speaking

Seeing a lot of commentary about reluctance of USDA to hike 2020/21 U.S. corn exports by more than the 75 million bushel (mb) increase given in the last WASDE report.

This was addressed to government officials at this past week's USDA data users meeting where a panel was asked about leaving its estimate of China's 2020/21 corn imports at 24 million tonnes (mt), despite export sales suggesting a higher figure.

The respondent indicated that to reach the 24 mt number for the remainder of the March-through-September period, you'd need to average 2.1 mt, which is larger than the 1.9 mt during the October-to-February period.

Our current expectations are for strong exports from the U.S., contrasting with gradually declining shipments from Ukraine.

The fact remains that some feel USDA is forecasting China to roll over about 6 mt or 240 million bushels (mb) of corn bought for this year for the 2021/22 marketing season.

Given still very high corn prices in China, the fact that they are consuming every other possible feed source including wheat and rice and a deteriorating Brazilian corn crop outlook actually suggests greater U.S. sales to the PRC not only this year but for the 2021/22 season as well.

This graphic shows U.S. corn export sales and shipments in million bushels as of the second week in April on the left-hand axis and as a percent of the USDA April WASDE export projection the right-hand axis.

Current sales on the books are 2.629 billion bushels (bb), by far the highest amount ever by this point in the season and a whopping 98.3% of the recently upwardly revised USDA projection of 2.675 bb, also the highest ever exceeding the prior peak of 95.7% in the 2013/14 season and just looking the fact we are just 46 mb from attaining the USDA target with 20 weeks left in this marketing year one could argue for a far higher final overseas sales figure.

The problem is that current shipments to date are 1.487 bb which appears to be the second highest figure ever as of mid-April next to the 1.575 bb seen in the 2007/08 season.

This however is only 55.6% of the current WASDE estimate which is actually below average.

This means every week between now and the end of August the U.S. will have to ship over 59 mb to attain this target which may be difficult given that so far this year we have only averaged 46.5 mb per week.

Note the yellow circles in the graphic show the percent weekly export shipments for last 20 weeks of marketing year have to average relative to the average weekly sales pace for first 30 weeks of marketing year which in this case is 27.8%.

This may seem high but in 5 of the past 6 seasons this rate has been exceeded and with the U.S. soybean export program ending there should be plenty of fob capacity and vessel availability to get all of this corn moved from our shores.

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