Although domestic demand for U.S. corn continues to be strong, export demand has been disappointing. What is impacting exports? What are your expectations for the winter?
Arlan Suderman, StoneX Financial Inc. chief commodities economist
Corn export sales have been weak the past six months. The dollar rallied more than 20% from January into September, making U.S. corn more expensive relative to supplies from Argentina, Brazil, and yes, even Ukraine. That largely made us the market of last choice.
The above three countries have weak currencies relative to the dollar, making their grain much cheaper. Plus, the currencies of our main customers are weak, adding to the cost to buy U.S. corn.
U.S. grain typically loses value during harvest when supplies are plentiful, but this year’s low water levels along with the intense drought in the West combined to make it very difficult to pull corn out of the Midwest to export terminals at New Orleans.
A shift to alternative rail shipments created a surge in overland freight rates. U.S. corn became expensive and getting it via the Mississippi became nearly impossible as exporters focused on filling available barges with soybeans. That further reduced the number of barges available to haul corn.
This year’s short corn crop forced some demand rationing. A small crop in the Plains left feedlots down 1 billion bushels of corn, milo and feed wheat, so Plains cattle feeders competed aggressively for central and eastern Midwest corn that could have been exported.
Brian Grete, Pro Farmer editor
As of Nov. 3, corn export commitments were 59% behind last year and 40% below the five-year average. Record-low water levels on portions of the Mississippi River have slowed shipments this fall. Soybeans are exporters’ primary focal point, reducing corn movement.
But that doesn’t fully explain the woeful start to 2022/23 corn exports. Chinese demand for U.S. corn is greatly lagging. As of Nov. 3, the U.S. had exported only 1.35 million metric tons (53 million bushels) of corn to China, and outstanding sales were 81% below 2021 and 75% behind 2020.
China projects its corn imports will decline 18% from last year and 39% from 2020. With China greenlighting corn imports from Brazil, the headwinds to increased export demand could build, barring a weather disaster in South America.
Canada is also importing far less corn than last year.
As of mid-November, Pro Farmer forecasts 2022/23 U.S. corn exports at 2.05 billion bushels, which is down 17% from last year. But in other years when corn exports have had a poor first two months of the marketing year, final shipments ended below 2 billion bushels, so our forecast could fall further.
