Fundamentally Speaking

The bullish side of corn centers on the fact that the pace of ethanol production is up 9% from a year ago.

Yet we have mentioned given lower miles being driven, the advent of electronic vehicles, more fuel-efficient engines, and limited acceptance of the 15% ethanol blends, it is difficult to see how corn used for this purpose rises much above the USDA figure of 5.3 billion bushels (bb).

Some support has also been seen from an iffy start to the South American growing season though it appears dry spots down there are getting smaller as Argentina now on a two-week period of good rains and while the drier regions in Brazil starting to get more precipitation.

Meanwhile the pace of our export sales has picked up in recent weeks as sales and shipments of corn are running 24% above last year's pace at this time a year ago.

The glass half empty side of this factor notes that the 2022/23 marketing year was a particularly poor season for U.S. corn overseas sales so the year ago comparison is not especially compelling.

This chart shows U.S. corn export sales and shipments as of the third week of October as a percent of the October WASDE export projection on the left-hand axis vs. the change in exports from that USDA October WASDE projection to the final figure in million bushels (mb) on the right-hand axis.

It is true that total sales so far this year at 689.8 mb are well ahead of the year ago number of 554.6 mb, but the year ago figure was the second lowest figure in ten years and just 25.8% of the October 2022 WASDE export projection.

This year's figure is 34.0% of the USDA 2.025 bb projection which is below the 10- and 20-year average of 36.2%.

So far 176.5 mb has been shipped and while ahead of the year ago 145.3 mb is just 8.7% of the October WASDE projection and below the 10-year average of 9.6% and the 20-year average of 11.0%.

Note last year's poor early season pace resulted in USDA's final export projection down by 489 mb from the October 2022 projection.

It is still too early to tell whether USDA will make additional cuts in the current projection which was pared by 25 mb from the September estimate as much will hinge on China's buying plants and the fate of this year's South American crops.

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