US corn exports find window of opportunity before 2022-23

A reduction in Brazil's export price competitiveness in August may provide a chance to pick up last-minute sales

The United States’ 2022-23 corn marketing year is one week away from concluding and it’s clear the US Department of Agriculture’s projection will not be met amid uncertainty surrounding its top two buyers, but a reduction in Brazil’s export price competitiveness in August may provide an opportunity to pick up last minute sales, according to market sources.

US export figure recap

US accumulated exports as of the week ending August 17 amount to 38.29 million tonnes, down 34% from 57.74 million tonnes a year ago.

At this point in the prior marketing year, corn exports during the equivalent week at 57.74 accounted for 97% of the 2021/2022 total of 59.76 million tonnes.

Looking at current numbers, exports of 38.29 million tonnes are 93% of this marketing year’s projected figure of 41.28 million tonnes.

This means that with just a week to go until the new marketing year, US exports are 2.99 million tonnes short of meeting the USDA’s estimate for the current 2022-23 marketing year of 41.28 million tonnes.

Even with the listed outstanding sales of 2.23 million tonnes, US exports would still land some 700,000 tonnes short.

Chinese corn imports

Despite active buying earlier in the year, Chinese corn purchases have trended lower over the past three years and US purchases from the Asian giant just haven’t been there.

China imported 1.68 million tonnes of corn in July, with the bulk of imports supplied by the US at 871,733 tonnes – 29% lower than in June and 42% less than a year ago, data released Sunday by China’s General Administration of Customs (GACC) showed.

During this time last year, exports for the marketing year totaled 13.79 million tonnes, or 24% of the total.

As of August 17, Chinese buying during the current marketing year amounted to 7.54 million tonnes, 45% lower year on year.

The sum accounts for 20% of exports so far and 18% of the USDA projected total export figure for 2022-23, which ends on August 31.

Heavy rains in the Northeastern region of China this week have caused more flooding in corn production areas, adding to damage endured earlier in the month, but the extent of the damage and if it will trigger any US corn buying is unclear.

Mexican corn imports

The United States’ historically most reliable trading partner, Mexico took back from China the spot of top US corn purchaser during the 2021-22 marketing year, accounting for 28% of total purchases, followed by China with 24%.

Four flash sales were announced so far this month of sales to Mexico totaling 28.8 million bushels, or 731,559 tonnes.

Of the total, 20 million bushels are scheduled for delivery during the 2023-24 marketing year – which begins September 1, 4.4 million bushels for delivery 2024-25, and 4.4 million bushels for 2025-26.

Weekly export data released this morning revealed that Mexico currently accounts for 37% of total exports to date, ahead of China’s 20%.

However, the US and its neighboring top trading partner are currently in tensions over Mexico’s decree to ban imports of genetically modified corn for human consumption, with the US requesting a panel formation last Friday under the USMCA to settle the dispute and Mexico declaring that the country will defend its position.

Brazilian corn exports

Brazil’s export price competitiveness has been fluctuating lately, with corn origination costs in Brazil remaining expensive and keeping FOB levels high.

“In Brazil, the corn origination cost is close to +100u, keeping FOB offers close to these levels for the October-December window,” the lead analyst at Brazilian brokerage and consulting company, Agrinvest, Eduardo Vanin said.

Adding that, “Yesterday, the exchange rate in Brazil fell by 1.7%, making the origination cost even worse.”

Fastmarkets Agriculture corn price assessment Wednesday placed Brazilian FOB levels at $222 per tonne, $4 per tonne above the US Gulf’s $218 per tonne.

Brazilian farmers are reluctant to sell at the current prices, with AgRural’s senior analyst Daniele Siqueira telling Fastmarkets Agriculture, “Farmers have been opting to sell more soybeans while they hold on to a bit more to their corn stocks in the hope that prices will become more attractive ahead.”

“It is not that farmers are not selling – they are – but volumes are not as high as one would expect considering the huge crop that is being harvested,” she added.

A window of opportunity for the US to pick up some additional business before the current marketing year ends may have thus opened.

“Export demand has been slow to develop although Brazil FOB values have recently moved above the Gulf, and this may send some demand to the US,” Advance Trading’s Larry Shonkwiler told us.

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