Fundamentally Speaking

Over the past month we have seen a flurry of new crop U.S. soybean sales to China as they start stepping up to the plate with our prices quite competitive and as a hedge in case things go south with the forthcoming Brazilian soybean crop which will start to be seeded the middle of next month.

Things have been rather quiet however on the corn front, though it was just a few weeks ago when the PRC was busily snapping up cargoes for the coming year.

The fact is that two weeks before the start of the 2021/22 marketing season the U.S. has sold more corn for this time of the year than ever before, raising more questions about the USDA's export projection that is 375 million bushels (mb) below this season.

This graphic shows U.S. corn and soybean new crop sales on the books as of third week in August on the left-hand axis and as a percent of USDA's August export projection on the right-hand axis.

This past week's export sales report showed 759 mb of new crop corn sold as of the third week of August, the most ever and 44% ahead the second highest amount sold which was last year on the way to a record overseas sales total.

It is 31.6% of the August 2021 WASDE 2021/22 export projection of 2.40 billion bushels (bb) which was incidentally pared by 100 mb from the July S&D figure.

It is also the second highest percent ever next to the 34.0% level seen in the 2013/14 season, a year in which the final export projection ended up 695 mb higher than the August 2013 WASDE projection, so this does suggest the current corn export projection is too low.

As for soybeans, the latest weekly export sales report showed 573 mb of new crop sold as of the third week of August which is 30.4% below the record 824 bb sold for this year at this point in the season a year ago.

As a percent of the August 2021 export projection of 2.055 bb (which was lowered by 20 mb from the July WASDE) is 27.9%, about equal to the 20-year average and actually below the 10-year average of 32.5% being sold at this point of the year.

Two supportive factors corn has going for it as opposed to soybeans is the likelihood of a below trend U.S. corn yield this season vs. soybeans, whereas of right now it appears to be closer to trend and perhaps maybe above it depending on how the growing season finishes out.

Secondly there appears to be more upside in corn export projections than soybeans given the good sales pace seen so far and as noted in a recent blog, USDA expectations for a huge increase in corn production and exports out of the Black Sea and South America that may or may not come to fruition.

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