US corn exports made their weakest start to the season since the mid-1970s, US officials said, cautioning of a continued struggle for orders, in briefings which flagged to “particularly fortuitous” autumn weather in the Midwest.
US corn exports in September, the first month of the 2019-20 marketing year, reached a “mere” 1.8m tonnes as measured by cargo inspections, according to the US Department of Agriculture, who data imply a slowdown of some two-thirds year on year.
More accurate Census Bureau data, to be released later, will likely show a larger figure, “partly because not all exports require inspection”, meaning some escape the more immediate data.
“That point notwithstanding, this would still be the lowest level of September US corn exports in about 45 years,” the USDA said, noting too a weak order book for future delivery.
“Outstanding sale for corn at the beginning of October reached 7.9m tonnes, down 45.5% from a year ago.
“The pace of US corn shipments and sales continues to disappoint.
‘Premium to competitors’
And the USDA flagged the potential for a further squeeze on demand for US supplies, given prices raised to “a premium to competitors’” offerings by weakened output expectations “combined with strong domestic demand and slow harvest progress”.
A “faster-than-expected pace of shipments” from South America and Ukraine, and cheaper prices in these origins, “are expected to further limit US exports during the latter part of the 2019 calendar year
“Moreover, in early 2019-20, competition from Ukraine is expected to intensify further, as the harvest progresses.”
According to UkrAgroConsult, Ukraine farmers had harvested 2.24m hectares, or 45%, of their corn crop as of Tuesday, 1.0 points ahead of last year’s pace, and at an average yield of 6.47 tonnes per hectare, in line with last year.
The USDA forecasts this year’s Ukraine corn crop at 36.0m tonnes, some 200,000 tonnes above the 2018 record, pegging exports at 4.90m tonnes, also an all-time high.
The increased expectation for the US’s own consumption of corn in 2019-20 reflects a buoyant livestock sector, in part reflecting herd expansion fostered by hopes of increased export demand, as China seeks to fill a protein void left by the impact of African swine fever on its swine herd.
The USDA said it had raised by 1.6m animals, to 102.8m, its estimate for so-called “grain consuming animal units”, with increases to estimates for dairy, beef, hog and poultry numbers.
It highlighted too increased expectations for domestic use of soymeal, a high protein feed ingredient.
“Protein feed use will benefit from higher US pork production next year in response to a brighter export outlook for meat.”
This was coming against a backdrop of weakening expectations for the US soybean harvest, with the USDA underlining in particular a month-on-month cut to its yield expectations for Illinois, Iowa, Minnesota and Nebraska – four of the top five growing states.
Even then, US soybean crop prospects could have been worse, given the early setback posed by the historically slow US spring planting season.
In fact, in the Midwest, “circumstances are particularly fortuitous this year as above-average September temperatures have enabled full development of late-sown crops.
“Temperatures have stayed warm long enough for crops to attain maturation.”
It was in the Southeast that weather had been less kind, with the USDA saying that “a months-long dry spell has taken a toll on yields”.