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Column: U.S. corn export outlook still weak despite stronger February

FORT COLLINS, Colo. (Reuters) - Corn exports from the United States hit a nine-month high in February and although sales have picked up in recent weeks, annual shipments could still fall short of already-light industry expectations.

Field of ripe wheat ready for harvesting is seen in Corn, Oklahoma, U.S., June 12, 2019. REUTERS/Nick Oxford/File Photo

Ever since U.S. corn prices jumped last year amid the rain-induced, record late planting, the world’s top supplier has struggled to sell the yellow grain on the international market. Monthly exports have been running notably below recent averages since June, but that changed in February.

Using weekly export inspection data published by the U.S. Department of Agriculture, February corn shipments likely totaled around 3.8 million tonnes, the highest volume since May and substantially higher than any month so far in the 2019-20 season that began on Sept. 1.

It is common for U.S. corn exports to be heavier between February and August, so last month’s jump is not unusual. February shipments likely exceeded the recent average for the month, a breath of fresh air considering how dismal the year has been so far.

According to U.S. Census Bureau statistics published on Friday, January corn exports totaled 2.49 million tonnes, some 34% below the recent five-year average and the lightest for the month since 2013.

That brought total shipments for the first five months of 2019-20 to 11.8 million tonnes (465 million bushels), also a seven-year low. The 2015-16 marketing year was another that started on a very light note, and through January, the current marketing year is 9% behind that year.

USDA does not have big expectations, though, pegging 2019-20 corn exports at 43.8 million tonnes (1.725 billion bushels). That number was unchanged from February in the agency’s March update, issued on Tuesday, and it would represent a 17% fall on the year.

In the last 20 years, annual U.S. exports have been smaller than the 2019-20 prediction only three times: 2002/03, 2011/12, 2012/13, all associated with poor harvests. The 2019 harvest was the smallest in four years, but that result was relatively better than in the aforementioned years.

Exports between March and August need to land nearly 7% above the recent five-year average in order to meet USDA’s latest target, and that would require corn sales in the second half of the marketing year to exceed the recent average by 15%. Only 26.6 million tonnes had been sold through Feb. 27.

U.S. corn is recently more competitive on the global market than it had been most of last year, but large South American harvests will soon enter the market. Argentina’s new corn supply will begin to be available next month, and Brazil’s usually starts in June.

Ironically, the recent U.S. marketing years in which corn sales started out very slowly ended with a flurry of sales and exports after South American harvests fell short. That happened in both 2015-16 and 2017-18, but USDA on Tuesday kept production in Brazil and Argentina at 101 million and 50 million tonnes, respectively, record or near-record large.

Some traders think China might step in and buy U.S. corn, which remains the wild card and has kept bulls’ hopes alive for more than a year now. That has yet to happen, though, and only one cargo of U.S. corn has sailed to China so far in 2019-20, which is in line with other recent years.

The opinions expressed here are those of the author, a market analyst for Reuters.

Editing by Matthew Lewis