Fundamentally Speaking

In the October 2022 USDA WASDE report, U.S. corn exports projected were lowered by 125 million bushels (mb) to 2.150 billion bushels (bb) citing smaller supplies due to the reduced 2022 crop and a slower early season demand pace.

Given the array of headwinds pressuring our overseas sales opportunities in corn, this may be the first of number of downward revisions for 2022/23 exports.

One can start with the high valued dollar based on an aggressive rate of monetary tightening by the Federal Reserve Board which stands in contrast to the more accommodative approach being taken by the central banks of Japan and China where policymakers there are more concerned about sluggish economic growth as opposed to wringing inflation out of the system.

As a consequence, the greenback has moved to its highest levels vs. the Japanese yen in over 24 years and is the strongest vs. the Chinese yuan since 2008, making our sales efforts to two of our largest corn customers very difficult.

Then there is increased competition from both Black Sea and South American producers, even with the ongoing worries about the longevity of the Ukraine export corridor deal.

Now to that add water levels on the Mississippi River that have dropped to historic lows this fall, halting barge shipments of grain and other commodities on the major shipping waterway.

This is of no small consideration given that 60% of U.S. grain exports exit the country via the Gulf Coast and this is weighing on both our export sales and shipments.

All this is reflected in a very sluggish pace of U.S. corn exports so far this marketing year as noted in this graphic that shows U.S. corn export sales and shipments as of the 2nd week in October in million bushels on the left-hand axis and as a percent of USDA October WASDE export projection on the right-hand axis.

Current sales through this week are 545 mb, which is the third lowest level since the 2012/13 season and represent only 25.3% of the October WASDE projection of 2.150 bb, the third lowest percent since the 2005/06 marketing year.

Though early in the year, total shipments are a mere 121 mb which is the fourth lowest figure since at least 1995 and as a percent of the WASDE projection is just above the 5.5% seen back in 2019/20, and what looks to be the second slowest pace since at least the 1995/96 season.

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