FORT COLLINS, Colo. (Reuters) - The new U.S. corn and soybean marketing year is just a month old, and the progress toward meeting big annual export targets is more advanced than normal in terms of sales, largely due to strong Chinese demand.
U.S. corn and soybean export bookings stand at record levels for this early stage, and that bodes well for the expectation that 2020-21 shipments will rebound sharply from the dismal year-ago levels.
Almost half of the combined 2020-21 corn and soybean sales are to China, though when removing Chinese and unknown buyers from the mix, the situation is more impressive for soybeans than corn.
As of Sept. 24, the United States had sold a combined 62.8 million tonnes or 2.4 billion bushels of corn and soybeans for export by the end of August 2021. That is 37% larger than the previous record for the date set in 2016.
Sales of corn and soybeans by Sept. 24 are also at record levels individually, and the biggest anomaly compared with past years is the 10 million tonnes of corn sold to China, some 40% of all corn bookings. The Asian country had previously purchased at most 3.4 million tonnes by that date, in 2013.
China accounted for 54% of all 2020-21 U.S. soybean commitments as of late September. That is above the 2015-2017 average by the same time of 44% but below the 2012-2014 average of 62%.
China’s U.S. soy bookings had reached 20.6 million tonnes or 757 million bushels by Sept. 24, some 17% higher than the prior record for the date set in 2013.
The U.S. Department of Agriculture pegs both 2020-21 corn and soybean exports at three-year highs, some 59.1 million tonnes for corn and 57.8 million for soy, up 32% and 26% on the year, respectively.
As of Sept. 24, total corn sales accounted for 42% of USDA’s full-year projection, well above the five-year average of 26%. That average is computed using USDA’s September estimate in each year.
Since 2007, the 42% sits behind only 2013, when 46% of the estimated exports had been booked. But USDA critically underestimated 2013-14 U.S. corn exports early on, so when compared with the final, only 30% of the annual volume had been purchased by Sept. 24, 2013.
For soybeans, export sales as of Sept. 24 cover 66% of USDA’s projection versus a five-year mean of 39%. Compared against September full-year estimates, a larger percentage had been booked in 2012 and 2013, but again, the early export outlook was much too light for those marketing years.
When stacked up against final marketing year export volumes, the current soy sales share of 66% would be record-large since at least 2007, assuming USDA’s outlook is realized.
While strong bookings are promising, market participants know that they do not truly count until they are shipped. USDA’s latest export sales report shows combined corn and soybean shipments between Sept. 1-24 at 7.4 million tonnes, record-high for the date but not a crazy anomaly.
However, the U.S. corn and soy harvests are still in progress, so it will be better to scrutinize shipments a bit later.
The recent flurry of Chinese sales might be distracting, but traders must remember to monitor business to other buyers since those buyers also account for a huge portion of U.S. exports. This includes analyzing commitments to unknown destinations.
Unknown corn sales as of Sept. 24 totaled 3.6 million tonnes, which is slightly above average for the date, but not to the extent that one would conclude it is mostly China.
Therefore, it is the same story when subtracting either China from the total or both China and unknown. Explicit bookings by countries other than China are very average and well below the levels of both 2016 and 2018, which coincided with poor Brazilian corn harvests.
The typical top U.S. corn customer, Mexico, had 4.35 million tonnes booked by Sept. 24, down 17% from a year ago and the lowest for the date since 2014, though very similar to 2015 levels.
Mexico had a poor corn harvest last year, but this year’s crop is seen up 12% to a new record. That is a factor in the country’s reduced interest in U.S. corn, but if the trend continues, it might be a sign that Mexican feed demand is not as strong as projected.
Japan is another top U.S. corn buyer, and it had 2.9 million tonnes booked through Sept. 24, the most for the date since 2011.
Only 18% of 2020-21 U.S. soybean sales through Sept. 24 are to buyers other than China or unknown, which is comparable with the 16% observed on the same date in 2016. The actual volume of 6.9 million tonnes is the second-largest ever and just a sliver above the year-ago level, though it is well off 2018’s record.
Non-China soybean sales were extremely anomalous in 2018 and that is a bad benchmark year since the onset of the trade war put U.S. beans on a massive discount for the rest of the world.
No. 2 U.S. soybean buyer Mexico had claimed 1.9 million tonnes through Sept. 24, a three-year low. Taiwan had booked the third-largest volume, some 741,000 tonnes, record for the date.
Soybean sales to unknown buyers stood at 10.7 million tonnes, nearly tied with 2016’s high for the week.
The opinions expressed here are those of the author, a market analyst for Reuters.
Editing by Matthew Lewis
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