Moving into 2020, US corn exports remain dependent on South American production and the competitiveness of US prices, said Todd Hubbs, of the University of Illinois’ Department of Agricultural and Consumer Economics, in an Extension letter called farmdoc daily.
However, a slow harvest combined with abundant crops in major exporting countries foretells a continuation of a slow export pace in the near term, Hubbs said.
WASDE US PRODUCTION FORECASTS NOT ENOUGH
Despite the corn crop dropping by 118 million bushels in Friday’s World Agricultural Supply and Demand Estimates report, a 100-million-bushel reduction in 2019-20 corn use muted any market bullishness, he said. The slow pace of new-crop exports took the forecast down by 50 million bushels.
US corn export projections sit at 1.85 billion bushels, the lowest marketing-year total since the drought-reduced crop of 2012-13, Hubbs said. Census Bureau data indicated corn exports in September were a little more than 80 million bushels. Through October, corn exports sit near 160 million bushels.
For the rest of the marketing year, 1.69 billion bushels of exports are required to meet the USDA projection, he said. Over the last five marketing years, exports from November through August averaged 1.795 billion. The largest amount, associated with poor crops in some major exporting countries, occurred during the 2017-18 marketing year and came in at 2.19 billion bushels. Without the hefty exports from that marketing year, the remaining four years averaged 1.69 million bushels.
SUMMER EXPORTS WEAKENED
Export weakness began in the summer as a massive second crop from Brazil came onto the world market, Hubbs said. CONAB reported Brazil’s second crop at 1.86 billion bushels, almost 490 million larger than last year’s.
The US price rally associated with expectations of a reduced US crop saw export price spreads explode in June and July, eclipsing $0.40 a bushel for an extended period, he said. This incentivized buying from Brazil by many traditional US customers.
Brazilian exports from July through October totaled near 1.01 billion bushels, eclipsing the previous year’s total over the same period by around 600 million and raises the question of how much corn Brazil has left, Hubbs said.
EXPORT SALES DISAPPOINT
While the Census Bureau has released no official data for US corn exports in October, exports from July through October came in near 386 million bushels, and export sales continue to disappoint, Hubbs said. Outstanding sales as of Oct. 31, totaled 313 million bushels, down from the 470 million at the same time last year, and outstanding sales sit lower for every major export market except Mexico.
Total corn commitments as of Oct. 31 sit at 468 million bushels, down 419 million from last year, Hubbs said. Eventually, Brazil may run out of exportable corn, at which point, buyers may turn to Ukraine. Projections for the Ukrainian corn crop sit at 1.4 billion bushels, slightly below last year’s record, and the export forecast from Ukraine was 1.18 billion bushels.
CATTLE, BEEF RECAP
Cash cattle trading this week got started at $115 per cwt on a live basis, up $1 to down $1 from last week. No dressed-basis trading was reported but occurred last week from $181 to $182 per cwt, up $1 to $2.
The USDA choice cutout Wednesday was up $1.84 per cwt at $242.34, while select was up $1.30 at $217.53. The choice/select spread widened to $24.81 from $24.27 with 85 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Tuesday was $147.44 per cwt, up $0.20 from the previous day. This compares with Wednesday’s Nov contract settlement of $145.57, down $2.22.