Exports of U .S. corn are falling off a cliff and trade is turning sideways as harvest winds down.
Demand is strong for U.S. corn, but unfortunately the supply is just not there. Additionally, countries like Brazil, Argentina and Ukraine have grain to sell.
This week’s export sales report shows actual sales at 140,300 metric tons. Traders were expecting between 150,000 to 250,000.
Jerry Gulke, president of the Gulke Group, says just a few years ago, export sales were double of this week’s level. He’s not surprised exporters are the end users that are falling off the fastest in the corn-supply and demand table.
"That’s partly what has to happen when you produce 1 billion bushels less. You have to cut demand somewhere."
Gulke believes the U.S. will likely keep cutting exports until the corn supply is replenished. He is also encouraged by the reduction in exports, as he thinks the supply/demand situation for corn may actually be able to reach equilibrium.
"If we’re using market share in exports and aren’t feeding as much here, maybe it will balance out. Maybe we’ll just make it on this short crop."
Trade Turns Sideways
As of Monday, Oct. 22 nearly 90% of the crop has been harvested, according to USDA. Normally, only around half of the corn crop is harvested by this point of the season. Key corn-growing states like Illinois, Iowa and Minnesota have all surpassed 90%.
See this week's market movement analysis: Strong Long-Term Outlook for Prices
As harvest winds down, the grain markets have moved toward a sideways pattern, Gulke says.
See the December 2012 corn chart:
"Markets are trading sideways because it can’t really break up or down. We just need a catalyst of some sort."
Listen to Gulke's full analysis: