Column: More Shipments and Sales Needed for U.S. Corn, Soy Exports in Months Ahead

(Reuters) – With three months to go in the current marketing year, U.S. soybean exporters may struggle to ship the government’s full-year forecast by Aug. 31 given the recent slower-than-needed pace.

More sales and healthy shipments will also be required for U.S. corn exports to meet the annual target set by the U.S. Department of Agriculture, though many analysts believe that peg to be too high.

Data published on Thursday by the U.S. Census Bureau showed U.S. soybean exports at 2.4 million tonnes in April. Corn shipments for the month reached 5.5 million tonnes.

Through the first eight months of the 2018-19 marketing year that began on Sept. 1, U.S. soybean exports totaled 33.5 million tonnes. That is down 25% on the year and is largely due to the trade war with top buyer China, as well as the reduced feed demand there with the African swine fever outbreak in the hog herds.

These numbers suggest that soybean exports must average 3.7 million tonnes per month from May through August to meet USDA’s full forecast of 48.3 million tonnes. That pace would be comfortably record-large for the months of May, June and July.

However, it is not completely out of the question that 14.8 million tonnes of soybeans could be shipped in that time frame given the large amount of outstanding sales left on the books. Some 57% of those are destined for China.

Recently, some skepticism has mounted over whether China will keep all these orders. U.S.-China trade talks are at a stalemate after breaking down last month. Reduced Chinese demand plus supply availability in Brazil may also put the purchases at risk. Many analysts believe that a good portion of this year’s sales to China was done out of goodwill, not necessity.

Another issue that could hamper all U.S. exports, not just U.S. soybeans to China, is the recent flooding in central United States. Historically high water levels on the Mississippi River have slowed the flow of supply to the largest U.S. grain shipping port in New Orleans.

Census data showed April exports to China at just 530,201 tonnes, down 61% from March and the smallest volume to the Asian country since December.

USDA’s export sales report shows outstanding 2018-19 soybean sales as of May 30 at 11.8 million tonnes with some 6.7 million awaiting shipment to China. Assuming that all these beans will be shipped, U.S. exporters would still need to sell and ship at least another 1.6 million tonnes of beans before the end of August, and that assumes that no other orders are cancelled.

Last month, USDA reduced its forecast for 2018-19 U.S. soybean exports to 48.3 million tonnes (1.775 billion bushels) from 51 million (1.875 billion bushels) in the previous month. While this certainly eases the pressure of exports to meet the forecasts, there is a chance that the bar is still too high with so much work yet to be done and the uncertainty around China.

Weekly export inspection data suggests that from May 1 to May 30, around 2.4 million tonnes of soybeans left U.S. ports – not very many considering the needed monthly pace. Up to 1.2 million tonnes or so likely sailed to China.

Taking the weekly export inspections data through May 30 and considering official exports through April, the United States needs to be shipping close to 940,000 tonnes of beans per week through Aug. 31 to meet USDA’s current expectation.

CORN

U.S. corn merchants shipped 38.9 million tonnes of corn between September and April, up 14% on the year. Through March, shipments had been up 26% on the year.

With USDA’s full-year forecast for 2018-19 exports at 58.4 million tonnes (2.3 billion bushels), U.S. corn exports must average 4.9 million tonnes per month from May through August to meet that target. That is actually slightly below recent averages for those months, even when excluding last year’s inflated anomalies.

Weekly inspections from May 1 through May 30 suggest corn shipments in that period were around 4.4 million tonnes, meaning May would likely fall short of the needed pace. From May 30 through Aug. 31, weekly shipments would need to average around 1.1 million tonnes per week unless USDA reduces its forecast.

And some analysts believe that needs to happen. Competitor Brazil is set to harvest a record corn crop possibly exceeding 100 million tonnes. Argentina’s crop was also record. The outputs of the two countries combined will rise at least 31% over last year.

Brazil’s total corn exports for the first five months of 2019 were up 64% on the same period in the previous year. Late last month the country’s largest corn-producing state, Mato Grosso, started harvest on its second corn crop, which is the supply that is exported. Progress was 3.5% as of May 31.

As of May 30, total U.S. corn commitments were still around 10 million tonnes short of USDA’s 2018-19 export forecast, but sales have been sluggish. Net sales of U.S. corn in the week ended May 30 were negative for the first time since August 2015, which does not instill much optimism for U.S. exports in the short term.