February 7, 2020 / 10:13 AM / 5 months ago

Column: U.S. corn exports still dull while soy hopes for rescue by China

FORT COLLINS, Colo. (Reuters) - U.S. corn and soybean exports are not currently slated to set records this year, though the 2019-20 season is off to a slow start, particularly for corn. The soybean campaign could spring to life if China starts to show more interest, but a revival of the corn effort may prove more difficult.

Unharvested corn, left as a barrier against blowing snow, stands in a field at a farm in Carroll, Iowa, U.S., January 30, 2020. REUTERS/Brian Snyder

The United States exported 5.57 million tonnes of soybeans in December, according to data published on Wednesday by the U.S. Census Bureau. That brings total soy shipments in the first third of the 2019-20 marketing year to 22.4 million tonnes, up 27% on the year but down 24% from the 2013-2017 average.

Some 2.6 million tonnes of U.S. beans went to China in December, placing the four-month total at 9.59 million. That is down 54% from the 2013-2017 average and, aside from last year’s outlier, it is the smallest September-through-December volume since 2008.

Shipments to China accounted for 43% of total U.S. bean exports in the first third of 2019-20, but that figure averaged about 71% prior to the trade war. Last year, just 2% of shipments during this period were to China.

Based on weekly export inspection data published by the U.S. Department of Agriculture, up to 5.5 million tonnes of soybeans likely left U.S. ports in January, including up to 2.3 million to China.

That would imply that exporters need to ship about 2.9 million tonnes of beans on average for the final seven months of 2019-20 to hit USDA’s current full-year target of 48.3 million tonnes (1.775 billion bushels). That is just a hair above the recent average for that period, but very doable depending on sales.

Normally, the next seven months would be a slower period for U.S. soybean exports as South America becomes the main supplier, but irregular Chinese buying patterns over the past year due to the trade war have changed this trend.

Soy exports in the final seven months of 2018-19 hit a record 25 million tonnes despite the painfully slow start, and that was due to more participation from China during that time.

But China needs to step up the buying very soon. Through Jan. 30, its total U.S. commitments for 2019-20 were just 12 million tonnes and in the most recent week, Chinese soy purchases hit a five-month low.

Non-Chinese bookings stood at 20.3 million tonnes as of Jan. 30, down substantially from last year’s extreme high but notably above previous years, suggesting that China is the only country that can make a huge difference going forward.

There are not very many purchased U.S. soybeans that are awaiting shipment, either, so without a pickup in sales, exports will soon slow. As of Jan. 30, USDA data suggests just 5.5 million tonnes of beans awaited export, down sharply from 12.5 million a year earlier. Unshipped sales had averaged over 9 million tonnes on Jan. 30 in the four years prior to that.

Just 611,000 tonnes of soybeans were yet to be shipped to China on Jan. 30 compared with more than 3 million on the same date in at least the previous five years. China has not made a single purchase of U.S. soybeans larger than 100,000 tonnes since Jan. 15.

CORN CONUNDRUM

The 2019-20 U.S. corn exporting campaign is off to the slowest start since 2012-13, when the corn crop was torched by a historic drought. The 2019 harvest was the smallest in four years following planting struggles, but export demand seems a bit worse than analysts had hoped.

Some 2.5 million tonnes of U.S. corn were shipped in December, bringing the total since Sept. 1 to 9.3 million tonnes. That is down 37% from the five-year average.

January shipments may have done slightly better around 2.6 million tonnes. USDA’s 2019-20 peg of 45.1 million tonnes (1.775 billion bushels) would imply that monthly corn shipments through August must average around 4.7 million tonnes, very slightly above the recent average when excluding 2018’s record, a huge outlier.

Using the January export assumptions, the United States likely shipped just under 12 million tonnes of corn in the first five months of 2019-20. That is 26% of USDA’s current full-year target. About 37% has been more typical for the time frame over the past decade, though corn exports had a similarly sluggish start in 2015-16 and 2017-18.

But U.S. exporters were bailed out of a bad situation during those years as corn crops came up short in South America, lifting U.S. shipments to anomalously high levels in the second halves of the marketing years.

So far, that is not the situation this year. Argentina is expected to start harvesting another strong crop in about a month or so, and although Brazil is still planting its heavily exported second corn crop, the prospects are positive.

U.S. corn sales through Jan. 30 totaled 22.8 million tonnes, about halfway to the full-year goal. Unshipped sales as of that date were at least a five-year low at 11.7 million tonnes, behind the recent average of 16.3 million tonnes for the date.

U.S. corn export prices are finally competitive on the global market after spending much of 2019 at elevated levels. But Argentina’s supplies will soon rise, rival Ukraine is coming off a bumper harvest, and Brazil could offer more headwind down the road if its growing season goes smoothly.

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

Editing by Matthew Lewis

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