The United States has exported an astonishing amount of grains in recent months – one-third more than a year ago – but the expectations are large so the progress must continue in order to meet the full-year goal.
The United States is a top supplier of corn, wheat and soybeans, and every month since last July, combined shipments of corn, wheat and soybeans have been record-large.
Since the corn and soybean marketing year began on Sept. 1, shipments of the two crops plus wheat total 73.8 million tons (2.77 billion bushels) through January. This is by far the largest volume on record for that period, towering over second-place 2014/15 at 62.2 million tons.
With such heavy domestic supplies coming off last year, some agriculture market participants wondered just how much grain and oilseed products U.S. ports could support all at once, though these large volumes seem to prove the country is equipped to handle more than what may have been assumed.
But the U.S. Department of Agriculture has very high hopes for the 2016/17 export campaigns, meaning that domestic grain shippers will need to keep up with near-record pace in the coming month.
The U.S. agency will update supply and demand balances at noon EST on Thursday, but analysts do not expect to see any significant changes to the domestic demand structures this month.
The United States has fulfilled 63 percent of USDA’s annual wheat export target through January – slightly below the usual level – so the final four months of the marketing year must be met with strong shipments.
There are just over 10 million tons (384 million bushels) of wheat left to ship by May 31 in order to meet USDA’s 2016/17 projection of 1.025 billion bushels. This means U.S. wheat exporters must average 2.6 million tons per month from February through May.
This is not impossible as the average monthly wheat volume in the last four months of the year has met or exceeded 2.6 million twice in the last decade. But those years – 2011 and 2013 – were associated with falling world wheat supply, which is not the case today.
The 2016/17 wheat crop is 89 percent sold as of March 2, which is on the higher end of the range over recent years. Moving forward, weekly wheat sales consistently at the top of trade expectations would provide more confidence that the optimistic annual forecast is achievable.
U.S. soybean exporters processed a monthly record 7.4 million tons (273 million bushels) of the oilseed in January, totaling 40.7 million tons (1.496 billion bushels) since Sept. 1.
This is the largest quantity of soybeans the United States has exported in the first five months of a marketing year, surpassing the old record from 2014/15 by more than 3 million tons.
The stage appears to be set for USDA’s 2.05 billion-bushel outlook to be reached by Aug. 31, although historically the highest export volumes in the second half of the marketing year – especially at the end – have arisen only when competitor South America struggles with its soybean crop. And things in the Southern Hemisphere are pretty favorable at this point.
Still, there is no clear indication thus far that USDA needs to cut back its forecast going forward, but there is also not a solid case for a significant increase to 2016/17 U.S. soybean exports – which has been the tendency in recent years.
Comparing the year-to-date progress against USDA’s full-year forecast reveals that U.S. soybean shipments are 73 percent fulfilled through January. This is a slower rate than the previous four years at the same point in time, and this trend has been consistent for most of the marketing year.
Corn and Products
In the first five months of the 2016/17 marketing year, the United States has shipped the eighth-largest volume of corn on record – some 22.7 million tons (894 million bushels). Through January, the country has fulfilled 40 percent of its annual target, which is ahead of the pace of recent years.
But similar to wheat, exported volumes of corn over the next six months need to be on the top end of what has been historically observed in order to reach the 2.225 billion-bushel forecast that USDA has on the balance sheet. If the full forecast is realized, 2016/17 will end up the fifth-largest corn export campaign in U.S. history.
A lot can happen between now and Aug. 31, particularly in South America, whose corn competes on the world export market toward the end of the United States’ marketing year.
Brazil and Argentina will be harvesting their corn between now and August, and could steal some business from the United States if the relatively benign weather pattern continues. Both countries are currently on track to harvest the largest corn crops in their histories.
It is also worth noting that the animal feed byproduct of ethanol production – distillers’ dried grains (DDGs) – recorded the largest January export volume on record in 2017 of 937,628 tons. This brings the total since September to 4.8 million tons, just shy of last year’s record 4.9 million.
This is significant because China, traditionally one of the top buyers of U.S. DDGS, launched an anti-dumping investigation last year resulting in large tariffs on the product, which has considerably slowed purchases by the East Asian country. This sparked concern in U.S. ethanol producers that demand for the feed grain could suffer.
But other customers have been making larger-than-normal purchases, which is why 2016/17 DDGs exports are hanging with last year. Turkey proved to be the biggest anomaly in January, with additional support from several Asian buyers, including Japan, South Korea and Indonesia.
Production of ethanol - one of the main uses for corn in the United States – has remained at record levels in recent months so there is certainly no shortage of DDGs in the country, particularly with the abundance of other competitor feeds. But amid the relatively healthy export efforts, the supply of the feedgrain is perhaps not piling up as much as feared.