Corn and soybean exports built over the last few weeks as lower prices spurred demand, and current estimates place both crops on track to meet or come near USDA projections for this marketing year, said Todd Hubbs, agricultural economist at the University of Illinois.
Hubbs noted his opinion in the Illinois Extension Service’s “Farmdocdaily,” adding that the size of the 2018 crop will provide a critical factor in determining US export potential next marketing year.
“A resolution of trade issues with China and NAFTA partners would provide needed support,” Hubbs said. “Current developments appear to make this a low probability event in the near term.”
TRADE UNCERTAINTY VS CROP SIZE
The escalating trade issues among the US and many of its trading partners continue to affect the outlook in corn and soybean markets, Hubbs said. Drastic price declines since the Memorial Day holiday show the effect of trade uncertainty and yield potential.
The prospect of large yields colliding with trade issues sets the baseline for determining export potential and price formation in corn and soybean markets moving forward, he said.
The prospect of record corn yields and the uncertainty of trade issues continues to pressure corn prices, Hubbs said. At 2.4 billion bushels, the USDA estimate for US corn exports in the current marketing year appears somewhat optimistic given cumulative exports to date and unshipped sales.
Census Bureau corn export estimates through May place corn exports for the marketing year at 1.656 billion bushels, he said. Through July 12, cumulative export inspections totaled 1.907 billion bushels.
Using the relationship between export inspections and Census Bureau totals, corn exports currently sit at 2.01 billion bushels, Hubbs said. For the rest of this marketing year export inspections need to average about 56 million bushels a week to meet the USDA projection.
For the last four weeks of export inspection data, corn exports averaged 56.7 million bushels a week, he said. Total outstanding sales for this marketing year sit at 454 million bushels, above the 394 million required to reach the USDA projection.
“While corn exports may fall short of the current estimate, the blistering export pace in the second half of this marketing year looks set to continue into the fall,” Hubbs said.
Current USDA projections for corn exports for the 2018-19 marketing year total 2.225 billion bushels, up 125 million from last month, Hubbs said.
However, world import projections for the upcoming marketing year sit at 5.95 billion bushels, up 193 million over the current marketing year estimates.
A low price and poor corn crops in South America and the Black Sea region give an outlook for continued strength in corn exports moving into next year, he said.
As of July 5, outstanding corn sales for 2018-19 sit at 183 million bushels, a 41% increase from the same time last year.
CATTLE, BEEF RECAP
No cattle traded on the Livestock Exchange Video Auction last Wednesday. Fed cattle sold two weeks previous at $106 per cwt, down $4 from the prior Wednesday.
Cash trade was reported last week at $110 to $111 per cwt on a live basis, steady to up $1 from the previous week and at a steady $173 to $175 per cwt on a dressed basis.
The USDA choice cutout Tuesday was up $0.63 per cwt at $204.39, while select was up $1.19 at $196.86. The choice/select spread narrowed to $7.53 from $8.09 with 118 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Monday, was $148.37 per cwt, up $0.10. This compares with Tuesday’s Aug settlement of $151.27, down $1.10.