U.S. corn and soybean export sales hit multi-month highs but still lag - Braun

Huge stocks of Brazilian products, high prices and uncertainty about the US crop have fueled pessimism about US export potential for corn and soybeans in the new marketing year starting September 1st.

The pace of export sales of new crop corn and soybeans from the US usually starts to pick up in July and especially in August. To some extent, this has happened over the last month, but the total number of bookings for both is at a four-year low.

USDA data Thursday showed that as of July 13, US exporters sold 4.5 million tons of corn and 4.9 million tons of soybeans for delivery in 2023-2024. Both of these indicators are the lowest for the date from 2019 to 2019-2020.

This covers only 8% of USDA's 2023-2024 forecast for US corn exports of 53.3 million tonnes (2.1 billion bushels), below the five-year average of 13%. However, this average is skewed upward over the past three years when China has been buying heavily and includes 25% coverage by that date in 2021.

New crop soybean sales represent 10% of USDA's 2023-24 target export of 50.35 million tonnes (1.85 billion bushels). The five-year average is 16%, skewed by last year's 24%, as buyers struggled to secure supplies from the US amid historic drought-related losses in Brazil.

Both of these export forecasts, especially for corn, are seen by some analysts as overly optimistic as cheaper Brazilian supplies increasingly eat up a share of US exports. But for now, attention should be focused on the US crop, as this will determine the direction of prices and, ultimately, demand.

While this week's futures rally doesn't indicate it, the USDA is still targeting a record US corn crop this year. This should boost total US corn shipments by 11%, the biggest annual increase in a decade, allowing for healthy but not excessive export growth in the balance sheet.

U.S. available soybean supply is expected to remain flat in 2023-24, but the USDA reports that U.S. exports are down nearly 7% year-on-year. It should also be noted that the agency predicts stable imports of soybeans from China in 2023-24 at the level of 99 million tons.

WHO IS INSIDE, WHO IS OUTSIDE

Corn sales in the new marketing year reached 492,000 tons in the week ending July 13, the highest weekly sales in 2023-24 since November and slightly higher than the previous week. The harvest of new crop beans last week was 760,000 tons, which is the best result of the 2023-24 season so far.

Commitments for new crop corn and soybeans last week were driven largely by sales to Mexico, and in fact, total US new crop corn orders to Mexico of 2.8 million tons are a record high for the date. New soybean sales to Mexico of 884,000 tons are the second highest to date after 2018.

Mexico is the biggest buyer of US corn and second in soybeans, but biggest soybean buyer China is holding back as Brazil's record soybean crop continues to flow into Chinese ports.

China bought 1.87 million tons of new-crop soybeans from the US, the lowest volume in mid-July in a non-trade war year in at least 16 years. Soybean sales to unknown countries, often believed to be China, are also well below average at 1.6 million tonnes, the same as at the same date in 2017.

China's recent lack of involvement in the US corn trade is striking, but not surprising given that China entered the Brazilian corn market late last year. China has reserved 272,000 tons of new crop US corn for 2023-2024, compared with nearly 3 million tons for the same dates in 2020 and 2022 and 10.7 million tons in 2021.

No. 3 US corn buyer Japan bought 746,000 tons of new crop corn, close to the recent average for the date, although normal buyers from Colombia and South Korea have none. Canada has bought almost 300,000 tons of US new crop corn, a record for mid-July.

Karen Brown is a market analyst at Reuters. The views expressed above are her own.