Canada Markets

Past reports have highlighted the importance of low corn stocks in major exporting countries and the resulting impact on the impressive pace of U.S. corn exports to date. With a picture worth 1,000 words, the total export commitments to date (outstanding sales plus accumulated exports) shown on the accompanying chart demonstrate just how impressive the pace has been. It is also an indication why many were frustrated that USDA hadn't increased their annual estimate until the April 10 World Agricultural Supply and Demand Estimate (WASDE) update.

In Thursday's WASDE report, USDA finally increased its estimate of corn exports by 100 million bushels (mb), taking it to 2.550 billion bushels (bb). If you compare that to previous highs shown on the chart -- the high set in 2020-21 ended with 2.747 bb of exports. The 2021-22 export total (a close runner-up to this year) came in at 2.472 bb and the fourth place 2007-08 had 2.437 bb in exports.

Another respectable U.S. weekly export sales report released Thursday morning backs up USDA's increased estimate. With another 31 mb in sales, total commitments are running 427 mb ahead of last year compared to the revised increase of 258 mb, year-over-year.

As far as South American estimates go, USDA left basically everything unchanged this month including 2024-25 production, exports, domestic use and ending stocks in Thursday's WASDE report. That does nothing to provide importing countries with much of an alternative to the U.S. for supplies, at least until Brazil's safrinha (second crop) corn is available later this summer.

It's well worth recalling that major exporters (Argentina, Brazil, Russia, South Africa and Ukraine) have combined 2024-25 export estimates 6 million metric tons (mmt) below last year, 9 mmt below 2022-23, and 10.6 mmt below record levels set in 2021-22.

That is primarily due to the fact that ending stocks are at what appears to be minimum (pipeline) levels. The 8.34 mmt estimated for 2024-25 is basically the same as that seen in 2012-13, leaving the market looking at 18 years since ending stocks were any tighter. At 8.34 mmt this year, they are down from 12.70 mmt last year and 56% below 2022-23's level of 18.67 mmt.

Regarding the elephant in the room, the escalating tariff war between the U.S. and China appears to be having little impact on corn. With China basically absent from the market in 2024-25 anyway, the trade between the rest of the world remains the focus.

On that front, the fact that Mexico (being the number one customer of U.S. corn) was left out of the entire reciprocal tariff situation has been a very positive sign regarding exports. With the 90-day pause announced Wednesday on reciprocal tariffs, the remaining American corn customers may be much more willing to keep purchases up.

In fact, it is possible that negotiations within the 90-day pause may see an increase in export demand. With the calculation used to determine the reciprocal tariff rate being entirely trade-deficit based, the best way for a country to satisfy the demands that it be addressed immediately would be to buy more American goods. And few options would satisfy that as quickly and efficiently as purchasing more agricultural commodities. Especially for a customer (or a prospect) like Japan and India that could use the additional supplies, for example. How the corn would be sourced is another question given the already tight U.S. balance sheet.

The recent dramatic decline in the U.S. Dollar Index should only make U.S. corn more price competitive for international buyers. With it falling below 99.00 briefly on Thursday evening compared to 109.620 on Jan. 13, it certainly helps encourage exports.

On a final note, it is appearing as though fund managers may have left the market too soon and could be a significant source of buying should bullish developments continue evolving. According to last Friday's Commitments of Traders data, managed money traders and commodity index traders combined to liquidate (sell) 433,391 net-long contracts or 2.167 bb of corn between Feb. 17 and April 1. They were likely the biggest factor in the initial $.76/bushel break in May futures and are surely contributing to the $.40/bushel rally seen in the last six sessions.

For more on the matter, see past posts here: https://www.dtnpf.com/… and here: https://www.dtnpf.com/….

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Mitch Miller can be reached at mitchmiller.dtn@gmail.com

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