U.S. corn, soy sales at 14-year low with new marketing year days away: Braun – Reuters

Source: By Reuters • Posted: Wednesday, August 28, 2019

The 2019-20 U.S. corn and soybean marketing years begin on Sunday, but the amount of product sold for export through mid-month is dismal, dampening the chances of trimming domestic supplies over the next year.

Through Aug. 15, some 9.94 million tonnes of corn and soybeans have been sold to foreign buyers for shipment in 2019-20, down 55% from both a year earlier and the five-year average for the date. That is the smallest amount since 2005, when just 5.66 million tonnes had been booked. (tmsnrt.rs/2Zi1m0F)

Soybean sales are down harder than those for corn and stand at a 13-year low. New sales total 5.26 million tonnes, down 58% from a year earlier and 62% from the five-year average. Corn sales of 4.68 million tonnes, a 14-year low, are down 52% on the year and down 44% from the recent average. (tmsnrt.rs/2ZmhQVi) (tmsnrt.rs/2NAGPxd)

The slow soybean sales are less surprising than those for corn because not only is the trade war with top buyer China ongoing, the Asian country has been battling a deadly outbreak of African swine fever (ASF) for more than a year and feed demand is suffering as a result.

The corn statistics are perhaps disappointing after a record-setting campaign in 2017-18 and the recent reductions in export expectations for 2018-19. But the sluggish bookings are a relic of bountiful harvests elsewhere in the world that are priced more competitively than product in the United States.


Prior to the onset of the trade war last year, about 60% of total U.S. soybean exports went to China, but through June, only 22% of total 2018-19 shipments had arrived there.

Because of the large amount of soybeans it requires, China typically books many cargoes well in advance of the U.S. shipping season, which ramps up in October after harvest. In recent years, it was not uncommon for China to have more than 10 million tonnes of the U.S. oilseed on the books by late August.

This year, China’s purchases through Aug. 15 total 260,000 tonnes, just 5% of the overall commitments for 2019-20. At this time two years ago, half of the outstanding sales for the new cycle were to China.

Sales to other buyers are also lagging at just 5 million tonnes. That is barely less than the 5.1 million sold two years ago but well below the recent average of about 8 million tonnes. Other countries do not typically book a lot of cargoes far in advance unless the price is extremely attractive, as was the case a year ago when the trade war was fresh.

U.S. export prices in the Gulf are currently more attractive than their South American counterparts, and this could boost business in the coming weeks and months, especially as new supply comes online. But lower U.S. prices do not offset Beijing’s 25% tariff, meaning Chinese buyers are likely to sit out if they can.

Broker and consultancy INTL FCStone said Monday that China’s consumption of soymeal for animal feed could fall by 10 million tonnes on the year, and that it may take up to seven years for the country to return pork production to pre-ASF levels. If true, this could keep global soybean demand suppressed for a while.

One other difference from a year ago is that 1.87 million tonnes of U.S. soybeans were sold to Argentina last year after its historic drought, but none are likely to be sold this year.


Corn output in the United States’ export competitors – Argentina, Brazil, and Ukraine – increased by 36% this year as all three enjoyed record-large harvests. Plentiful and well-priced foreign supply has been and will likely continue to be a primary setback for U.S. corn exporters.

Market watchers have hoped a U.S. deal with China could boost corn sales, but ASF is also expected to significantly reduce corn use for animal feed, and Beijing has not made “goodwill” purchases of U.S. corn as it has with soybeans.

Over the weekend, it appeared U.S. corn could benefit from a trade deal with Japan, as U.S. President Donald Trump asked his Japanese counterpart to purchase excess supplies of U.S. corn.

Japan, along with Mexico, is already the top importer of U.S. corn, though its 2019-20 commitments were at multi-year lows as of Aug. 15 at just under 600,000 tonnes. This implies there could be room for Japanese buyers to step up, but Prime Minister Shinzo Abe said potential purchases would be handled by the private sector.

According to the U.S. Department of Agriculture, around 80% of Japan’s total corn imports is sourced from the United States, and most of that is used for feed. It is unclear exactly what Japan would do with the excess corn unless it increased its animal herd, but Trump was hoping Japan would also buy more U.S. meat, which would seemingly conflict.

Trade deals may lead to a shift in suppliers but they do not instantly create demand, so the corn market may benefit little if at all from a global perspective, especially in the case of a U.S.-Japan deal.

Exports account for only 15% of U.S. corn use versus nearly one-half for soybeans, but other corn demand is not sparkling. Corn use for ethanol has not risen in the last year, margins have been poor for several months, and ethanol stocks are at record high levels for the time of year.

The ethanol industry has also argued that the trade war and the Trump administration’s small refinery exemptions from the nation’s biofuel laws has and will continue to hurt business.

There is valid concern that some of the U.S. corn crop will not make it across the finish line after being planted so late, and production could fall from the current forecast as a result. But since existing supplies are not rapidly disappearing, a smaller corn crop might not make as big of waves in the market as some may expect.