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Slow U.S. Corn Shipments Could Pressure Supply Forecasts

The United States has already secured a record corn export campaign for the nearly concluded season, but the shipments are unlikely to match the government’s current forecast because the pace has recently been too slow.

Disappointing export inspections last week – a marketing year low – might be an indication that the U.S. Department of Agriculture should reduce its forecast on Thursday.

Analysts see old-crop U.S. corn ending stocks up 1% from last month and new-crop stocks down 9%, the latter on an expected reduction to the harvest. But it is not clear what export adjustments they might have assumed, if any.

USDA’s latest U.S. corn export estimate for the 2020-21 year ended this month is 72.4 million tonnes (2.85 billion bushels), but only about 66 million have shipped through July. That would require August exports to top 6 million tonnes and reach a new record.

But as of July 29, corn export sales were still about 2.7 million tonnes short of USDA’s full-year target, and 2020-21 commitments have been below average for the time of year since at least April.

It should be noted that data from the U.S. Census Bureau, which was updated on Friday and is the official record of export data, shows that September-June corn shipments were at least 4% heavier than suggested by inspections or weekly export sales. This factor could cause analysts to underestimate total corn shipments.

To ship all current sales by Aug. 31, weekly shipments need to exceed 800,000 tonnes, above the implied 667,220 in the latest week. Weekly sales data through July 29 would suggest that number closer to 1.5 million tonnes per week.

Unshipped bookings that stand out are those to China, whose sudden appetite for imported corn boosted U.S. exports to new highs. China has not bought a significant amount of 2020-21 U.S. corn since March, and it has net canceled old-crop orders in the latest six weeks. There have been no new-crop sales to China since May.

The needed reduction to 2020-21 U.S. corn exports might be only 100 million to 150 million bushels for now based on the recent export and sales pace, though that by itself could lift old-crop stocks by well over 10%.

BRAZIL LOSS, U.S. GAIN?

In addition to China’s buying, USDA’s lofty U.S. export target for 2020-21 is also influenced by harvest losses in Brazil. When Brazil’s crop falters, more business usually reroutes to the United States, though that has not exactly played out.

High U.S. prices and soaring freight costs are likely factors in the slow U.S. business, but market participants have also wondered if global demand for corn is perhaps weaker than expected.

However, analysts expect USDA to cut Brazil’s 2020-21 harvest to 88.7 million tonnes from 93 million previously. If that is realized, it will be interesting to see what USDA does with U.S. corn exports given presumably lower shipments out of Brazil.

Brazilian grain exporter group Anec last week projected Brazil’s exports this season will be half of last year’s volume, reaching 17 million tonnes. Brazil is typically the No. 2 corn exporter and July-November is the main shipping season, though the harvest is behind schedule.

Source: Reuters

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