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Column: Contemplating room for growth in record U.S. corn, soy export outlooks

FORT COLLINS, Colo. (Reuters) - The United States has sold an unusually large amount of corn and soybeans for export when compared against the record expectations for the full marketing year. Questions remain whether export projections need to move even higher and if such a huge schedule is even possible.

Soybeans are harvested from a field on Hodgen Farm in Roachdale, Indiana, U.S. November 8, 2019. REUTERS/Bryan Woolston

Last week, U.S. soybean export sales for the 2020-21 marketing year hit an 18-week low. But commitments as of Nov. 12 total 51.3 million tonnes, some 86% of what the U.S. Department of Agriculture expects will be shipped in the entire marketing year ending Aug. 31, 2021.

USDA left 2020-21 U.S. soybean exports unchanged last week at an all-time high of 2.2 billion bushels (59.9 million tonnes). Some analysts feel the advanced pace of sales warrants a higher export forecast, which would be a big deal for the already razor-thin supply expectations.

Soybean sales were also very strong versus expectations in 2013, 2014 and 2016, and the export forecasts in December of those years were between unchanged and up 40 million bushels versus November. USDA has already increased the 2020-21 forecast since May by 150 million bushels, a larger-than-average move.

Even if USDA does not raise the export forecast next month, final soybean exports in those three previously mentioned years were more than 100 million bushels higher than what was expected in November. This year, additional U.S. potential is closely linked with the success and timing of the Brazilian harvest, which is still slated to be record-large despite an imperfect start.

USDA this month cranked U.S. corn exports up by 325 million bushels to a record 2.65 billion bushels (67.3 million tonnes) despite a historically large cut to the crop. Even with the huge jump in the forecast, corn export sales through Nov. 12 cover 52% of the full-year target, well above the five-year average of 38%.

Corn sales by the same date were also robust compared with expectations in 2013 and 2016, and final exports in both those years came in above what was projected in November. Adjustments to this year’s exports will be highly dependent on Chinese demand, an area where several market participants believe USDA is still too conservative.

Corn shipments have yet to ramp up, as just 12% of the full-year target had been fulfilled through last week, below the recent average of 15%.

But 37% of the soybean forecast had been shipped through Nov. 12 compared with a 29% average, and that is despite a recent slowdown in activity. Weekly export inspections suggest the November pace thus far is slightly below that of 2014 and 2016, the two highs for the month.

Even a small increase in U.S. soybean demand would have a big impact on the balance sheet. USDA predicts 2020-21 U.S. ending stocks at a seven-year low of 190 million bushels (5.2 million tonnes), which would cover just over two weeks of top buyer China’s needs.

WILL THEY ALL FIT?

With record exports expected for both corn and soybeans this year, there have been questions as to whether it is physically possible. So long as the shipments are sufficiently spaced out between now and the end of August, they would not surpass historical monthly maximums.

Official export data as well as export inspection data indicate that combined corn and soybean shipments set new monthly records in September and likely October, largely bolstered by huge bean volumes.

To meet USDA’s current full-year export predictions, the combined shipments for the remaining 10 months of 2020-21 would have to be just 1% stronger than the same period in 2017-18. Corn exports between April and July 2018 topped the previous high for the period by more than a third after South American production fell critically short.

For all other months, the pre-2020 records were set in late 2016 and early 2017. Although they occurred in different years, if considering all the monthly records from November through August, this year’s corn and soybean exports could fall by up to 7% from each maximum and still make the current target.

That suggests there may be room for even more exports than appear on the balance sheet, but it depends on the timing of shipments and the destinations. One potentially consequential difference between this year and prior high-export years is that Mexico accounts for a notably smaller share of corn commitments thus far. A large portion of U.S. corn travels into Mexico by rail instead of sea.

The years in which the monthly highs for corn and soybean exports occurred do not change when adding in wheat, including the two recent records set in September and October.

Given U.S. wheat exports through the first five months of 2020-21 that began on June 1, shipments for the remaining seven months must be slightly better than recent averages in order to be on track for USDA’s forecast of 26.5 million tonnes (975 million bushels).

The opinions expressed here are those of the author, a columnist for Reuters.

Editing by Matthew Lewis

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