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US corn exports 'to pick up', says ADM boss, upbeat on ethanol too

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US corn exports are to “pick up”, the chief executive of Archer Daniels Midland said, flagging hope for the ethanol market too, even as official data showed forecast-beating US trade in the grain last week.

 

Juan Luciano - asked when US corn exports might accelerate after a slow start to 2019-20 - replied that the time “when we are becoming more competitive is row now.

 

“For the next two or three months’ window, US corn is the most competitive in the world.

 

“So you’re going to see those exports pick up right now.”

 

‘Continue to impress’

The comments came even as the US Department of Agriculture revealed US corn export sales of 1.23m tonnes for the week to last Thursday, ahead of the range of 600,000-1.20m tonnes that investors had expected.

 

The figure also represented a second successive week of sales above 1.0m tonnes, for the first time in about a year, and was accompanied by strong data too on actual shipments, of 681,392 tonnes, the second largest figure of 2019-20.

 

The data meant that the "lag in corn export sales versus last year narrows", albeit to a still-large 10.8m tonnes, said Richard Feltes at Chicago-based RJ O’Brien.

 

US corn export sales data “continue to impress”, said broker Benson Quinn Commodities, which is part of the ADM empire, although adding that “the market would like to see China buying these commodities as well”.

 

Mr Luciano forecast that US ag exports to China were poised for a pick-up following the countries’ phase one trade deal agreed two weeks ago, bit said that ADM was expected such demand to be “back-end loaded… coming in the second half of the year”.

 

‘Good precedent’

Mr Luciano added to that it was “encouraging news” that ethanol, a big source of corn demand in the US, had been included in the phase one deal, one factor which suggested a “a little bit of a better medium-term perspective” for ADM’s operations in the biofuel.

 

He also flagged last week’s US court decision to strike down three waivers which the Environmental Protection Agency granted in 2017 freeing refineries from biofuel blending obligations, terming the ruling “a positive” that “sets a good precedent”.

 

The EPA has over the past two years stepped up use of these waivers, which critics say have cost 1bn bushels in corn demand.

 

He also noted that “we have seen sugar prices come up over 20% since September, which is another important thing,” with stronger prices of potentially encouraging mills to turn more cane into sweetener rather than ethanol.

 

Talks at ‘advanced stage’

ADM last month, as part of a review of its ethanol assets, launched Vantage Corn Processors, or VCP, a wholly owned subsidiary seen as a launchpad for the group to distance itself from operations in the biofuel, which have a mixed record of profitability.

 

“We still are discussing with a few parties” options over the operations, Mr Luciano said.

 

“I can characterise those discussions in an advanced stage. So hopefully, we will get to a resolution on that.

 

“We have a couple of alternatives of different type of deals that we’re looking at.”

 

He added that, in corn wet milling - which produces the likes of starch and gluten meal rather than the ethanol and distillers’ grains manufactured in dry milling – results had been supported by the knock-on effects of strong prices of vegetable oils such as palm oil and soyoil.

 

“Corn oil values have gone up. And so that’s really supported our overall coproducts from that business,” Mr Luciano said.

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