Fundamentally Speaking

Probably the most surprising aspect of this week's WASDE report was the sharp drop in the 2024/25 ending stocks of 200 million bushels (mb) to 1.738 billion bushels (bb) linked to a 50 mb increase in corn used for ethanol and a 150 mb pop higher in projected exports.

This strong increase in demand was quite surprising for though the trade felt total corn consumption was running higher than the last USDA estimate, the size of the upward adjustment was well above even the highest guess.

This chart shows the change in the USDA's U.S. corn export projection from the November to the December WASDE reports in million bushels on the right-hand axis while reported on the left-hand axis are U.S. corn sales and shipments as of the first week in December as a percent of the USDA's December WASDE export projection.

The USDA increased its estimate of overseas sales from 2.325 bb last month to 2.475 bb this week, which would be the second highest figure ever next to the 2.747 bb sold in the 2020-21 season.

Noteworthy is the fact that China took in over 30% of our corn that year but none so far this marketing year.

The 150 mb increase from the November to December is the largest ever in bushel terms and the 6.5% increase on a percentage basis the second highest next to the 7.7% increase seen from the November to December WASDE reports in 1994.

With no sales on the books to China, possible tariff action being enacted against Mexico, our largest customer, by the incoming administration, and the favorable outlook so far for the South American corn crop, one might wonder whether this large increase in projected exports by the USDA is justified.

They say that the strong sales pace so far this season to a number of different countries, along with reduced Brazilian sales and competitive prices are the reasons for this upward revision.

The total cumulative exports via the weekly export sales data shows 1.383 bb sold and 494.7 mb of that shipped.

That is 55.9% of the December WASDE projection, the third highest in that regard since the 2013/14 season and above the 20-year average of 49.1%.

Shipments through the first week of this month are 20.0% of the WASDE projection, the highest in six years and just below its 20-year average of 20.8%.

Since 1990 there have been six other years when cumulative sales through the first week of December exceeded 55% of the Dec WASDE projection and four of those years saw a further increase in exports into the final figure with the other two just slight declines.

This suggests USDA is close to the mark and final 2024/25 exports may be even higher, but there are a lot of unknowns heading into the final two/thirds of this marketing year.

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