A barnstorming week of data for US corn net sales has teed up an unusual predicament for the USDA ahead of its monthly update to the World Agriculture Supply and Demand Estimate, due out on April 9.
Its outlook for US exports looked on solid ground back on February 9, when the agency pushed its export estimate up 2% to 2.6 billion bushels (66 million mt).
Back then, net sales were only at 57.5 million mt.
However, it looked less convincing at the March 9 update, when the agency held its ground at 66 million mt despite net sales jumping to 59.5 million mt.
But with this week’s net sales data coming in at 4.48 million mt for the current marketing year – and falling well within analysts’ expectations – it means that Chinese largesse has now taken the total to 65 million mt.
That was augmented by a private exporters note released Thursday, that confirmed Japan has also booked 110,000 mt from the 2020/21 marketing year.
With two weeks to go before the USDA reveals its April Wasde update and with three weeks of net sales data still to accommodate, the US government department is likely to find itself in a position where the actual net sales figure will have already outstripped its current export estimate.
So how high can it go?
Analysts are now working with expectations of at least 200 million bushels being added to the outlook, lifting it to 2.8 billion (71 million mt), while analysis of previous record-breaking export years suggests the US has the port capacity to achieve it.
“I’m using 2.85 billion bushels, and some are even higher,” one analyst told Agricensus on Friday, a figure that equates to 72.4 million mt, some 12 million mt higher than has ever been achieved before.
If so, the USDA is likely to have to slash its outlook for the 2020/21 marketing year ending stocks that currently stands at 1.5 billion bushels (38 million mt), and could fall as low as 32 million mt if the USDA doesn’t pare back domestic use or ethanol production outlooks.
Against that, with still more than a third of the marketing year to run, any further hike in net sales will heap pressure on the physical logistics and domestic users, such as the ethanol sector.
Domestic corn prices have picked up by around 5% since the beginning of March as processors are forced to compete with the export pull, and those prices creeping higher could encourage substituon in the domestic feed chain.
That would alleviate some of the pressure on ending stocks, while the mounting export target is likely to be dependent upon flawless logistics at the primary hubs, and reasonable weather keeping the river network flowing smoothly.
If so, US sources are confident that 72 million mt is feasible – although it may require full use of the rail connections, Atlantic and Lakes export facilities to augment the US Gulf and Pacific Northwest hubs.
