Global corn buyers may finally be headed for US supply as competition wanes

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Year-to-date U.S. corn export figures may look grim, though an upturn could be brewing as rival corn suppliers Brazil, Argentina and Ukraine may not have the supplies and/or capacity to do sizable business over the next several months.

However, the road ahead is steep for U.S. exporters as sales are well behind the normal pace.

U.S. corn export sales for 2022-23, which ends on Aug. 31, totaled 29.2 million tonnes (1.15 billion bushels) through Feb. 23. That covers 60% of the U.S. government’s latest full-year outlook of 48.9 million tonnes (1.925 billion bushels), tied with 2019-20 for the lowest coverage rate by the same date in more than 15 years.

That means U.S. exporters still must sell nearly 20 million tonnes of corn for export in 2022-23, which would be a five-year high for the period and 38% above the recent four-year average.

The U.S. Department of Agriculture’s domestic corn export forecast for 2022-23 reflects declines of 22% from 2021-22 and 30% from 2020-21’s record due to a contraction in U.S. supplies. China was also expected to be much more active in the U.S. corn market than it has been, and some of that is attributable to China and Brazil’s newly established corn trading relationship.

However, there have been credible reports of China buying significant volumes of old-crop U.S. corn this week, something it has not done in nearly a year.

China has been quietly back in the U.S. corn market lately, though to a much lighter degree versus the last two years. Through Feb. 23, China had booked about six U.S. corn cargoes since late January for delivery in the current marketing year.

The last daily sale announcement of U.S. corn explicitly to China was on Aug. 9 with 133,000 tonnes for delivery in 2022-23. The last daily sale of anything was 120,800 tonnes of corn on Feb. 17, to be delivered to unknown destinations in 2022-23.

COMPETITION EASING?

Brazil harvested a bumper corn crop in mid-2022 and exports have been on fire, threatening to dethrone the United States as top corn supplier. Since July, Brazil has shipped over 45 million tonnes of corn, well above the prior record of 36.4 million set three years ago.

But that run is coming to an end as Brazilian exporters are shifting full focus to soybeans. Preliminarily, Brazil shipped 2.3 million tonnes of corn last month, down sharply from January’s 6.2 million and the lowest monthly volume since June.

Brazil is expected to harvest another record corn crop this year, but its heavily exported safrinha corn is not yet out of the woods as much of it will be sown outside the ideal window due to weather delays.

Argentine crops are amid their worst drought in 60 years and harvest estimates continue falling. As of Thursday, some 56% of Argentina’s corn was in poor condition, up from 51% a week earlier and 24% last year.

Reuters reported this week that traditional Argentine corn customers such as Vietnam and Malaysia have turned to India for their needs as that corn is now competitively priced. India exported 3.4 million tonnes of corn in 2021-22 versus Argentina at 34 million.

There is a chance that corn exports out of Ukraine, which has shipped 18.6 million tonnes of the yellow grain since July 1, shut off on March 18 if Russia decides against renewal of the grain export deal.

In exchange for continued participation in the export deal, Russia wants no restrictions or hindrances for its own exports, which had been a complaint ahead of the deal’s last extension in November.

JAPAN

The absence of No. 3 U.S. corn buyer, Japan, may be more alarming than China’s. Through Feb. 23, Japan had just under 3 million tonnes of U.S. corn on the books for 2022-23, very easily the lowest in over 20 years and down from over 7 million a year ago.

Brazil plays some role in this, as its July-January corn exports to Japan totaled 5.6 million tonnes, up from 1.9 million a year earlier. However, shipments during the same period in 2019-20 were greater at 6.7 million tonnes, and Japan started ramping up its slow U.S. corn purchasing pace in March 2020.

USDA’s latest predictions show Japan’s 2022-23 corn imports flat on the year around 15 million tonnes, which suggests Japanese buyers still have substantial corn needs to cover.

No. 4 U.S. corn buyer Colombia has recently stepped up, buying most of its 1.22 million-tonne total within the latest seven weeks. Top customer Mexico may also have room for additional purchases as its 12.76 million-tonne total as of Feb. 23 is 8% lighter than a year ago.

Source: Reuters

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