Canada Markets

Thursday morning's corn export sales report highlighted the likelihood that the USDA will increase (or at least should increase) its corn export estimate in Friday's World Agricultural Supply and Demand Estimates (WASDE) update. The 1.262 million metric tons (mmt) in 2024-25 marketing year sales reported for the week ending July 3 far exceeded expectations for 375,000 to 900,000 metric tons (mt). It also highlights the pattern of the year of exceptionally strong sales forcing the USDA to constantly revise its corn export estimates higher.

Early in the winter, we highlighted the impact that low corn stocks in major exporting countries would likely have on U.S. exports. See more at https://www.dtnpf.com/…. With a picture worth 1,000 words, the total corn 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 the USDA hadn't increased its annual estimate until the April 10 WASDE update. Since then, USDA has increased the estimates twice and another bump is likely to come Friday.

With total commitments of 2.731 billion bushels (bb) already, two months left in the marketing year (ending Aug. 30) and a current USDA corn export estimate of 2.650 bb, you can see why anything less would be a surprise.

For comparison, the only year exceeding this year's pace was 2020-21, with total commitments of 2.745 bb by July 1, and ended with total exports of 2.747 bb of corn for that year.

With managed money traders being obsessed with the seasonal trade of selling when the crop is half planted, no risks are in sight, and they're expecting record production, prices have steadily put in new contract lows regardless of exceptional demand from both exports and the ethanol industry. Of course, that has encouraged additional export sales. In fact, the managed money traders group now has a net short position of 206,463 contracts or 1.031 bb (as of July 1), according to Monday's Commitments of Traders report. Since their maximum net long position set on Feb. 3, they have been net sellers of 2.853 bb, regardless of tight old crop supplies. Again, helping to keep demand exceptionally strong.

Eventually, peak optimism over production potential will pass and a (harvest) low will be put in as the seasonal selling trade is liquidated, but when is the burning question on most producers' minds.

In years of tight supplies, the lows tend to be marked early, even as early as July, while years with burdensome supplies tend to see a low put in as late as December. The debate is still far from over, but with tight old crop stocks only likely to decline further, and that resulting in tighter beginning stocks for the new crop, any sign of production issues developing may inspire an early liquidation of short positions by the managed money traders.

On a parting note, the decline in the U.S. dollar should only make U.S. corn more price competitive for international buyers. With it falling to 96.00 briefly on July 1, compared to 109.620 on Jan. 13, it certainly helps encourage exports.

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

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