Fundamentally Speaking

The pace of U.S. corn exports has been quite sluggish for some time with the USDA posting several downward revisions for the 2022/23 marketing year over the past few months and again in this month's WASDE report by another 25 million bushels. It is now at a 1.625-billion-bushel projection.

New-crop corn wasn't spared as USDA also lowered the 2023/24 overseas sales projection by 50 million bushels to 2.050 billion. This is still 425 million above this year's figure and is the third largest positive differential in the August WASDE between old and new crop export estimates ever.

This makes one wonder why the USDA is more optimistic with regard to the coming year's export prospects other than the fact that larger supplies will translate into lower prices.

Similar to what we did earlier in the week with soybeans, this chart shows U.S. old-crop corn shipped and sold as of the second week of August as a percentage of the August USDA WASDE old-crop export projection on the left-hand axis. On the right-hand axis, the amount of new crop corn sold as of the second week of August as a percent of the August WASDE new crop corn export projection is plotted.

The latest export sales report on August 10 showed total corn sales this year at 1.596 billion bushels, meaning only 29 million need to be sold over the next two weeks to attain the old-crop target. That figure, however, is 98.2% of the August 2023 old-crop WASDE projection and is the fourth lowest percentage going back to 1993 for by this time of year, total commitments usually exceed the USDA August projection by over 1% as some of that corn sold will not ship.

Meanwhile, 1.489 billion bushels have shipped, which is 91.6% of the 1.625 billion old-crop projection and is just slightly below the 1990-2022 average of 92.2%.

As for new-crop corn, total sales on the books as of the second week in August are 262.9 million bushels, the fourth lowest since 2009 and just 12.8% of the 2.050 billion 2023/24 export projection, and the fourth lowest since 2009. Record Brazilian corn production this past year, an expected rebound this coming year in Argentina and the virtual disappearance of China from the U.S. corn market suggests the 425 million higher USDA corn export projection for the coming year over this year should shrink over time.

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