USDA report indicates corn export uptick

CHARLOTTE, Mich. — While the December world agricultural supply and demand estimate report didn’t disappoint those expecting blasé data, there were some interesting reveals in the corn arena.

Angie Setzer and Karl Setzer, co-partners at Consus Ag Consulting, hosted a live podcast on X, formerly Twitter, as the U.S. Department of Agriculture’s supply and demand estimates report was released Dec. 8.

“Typically, you don’t see very big changes that come from the December report. We tend to wait a see what we’re going to have come out in the January report,” Angie said.

“The January report will have the quarterly stocks and all sorts of things in it that will kind of help us reconcile overall supply and demand to start the first quarter of the new year.”

USDA lowered the corn ending stocks by 25 million bushels to 2.131 billion for the 2023-2024 marketing year. The 25 million shift was due to an increase in corn exports. What was the expectation?

Angie: The average trade guess for carryout ahead of the report was 2.152 billion bushels. It was 2.156 billion last month.

That’s going to put us up to where we’re looking at a 450 million bushels year-over-year increase, give or take. I’m in line with that. If you talk to anyone I’ve been talking to for the last 15 months, this is probably the first time where I agree with the USDA and their corn export figure.

I wouldn’t be the least bit surprised to maybe see it be a little more stout, especially with what we’ve seen with the non-Chinese business picking up.

Brazilian farmers are basically in no hurry to sell their bushels. They’re sitting in silo bags, they’re well taken care of, and they’re just waiting for the market to tell them that they need to sell.

Everyone is pretty nervous about what we could see from a safrinha production standpoint in Brazil with the delay in soybean planting.

We’re waiting for Argentina maybe to show up here in April-May time frame. So, this is kind of our time to shine (in U.S. corn exports) for the first time I’d say in 18 months, give or take.

Karl: I’m with you, the simple fact that we held there pretty steady. I think we’ve got to watch the dollar right now.

I think we do have a chance to make some exports, but one thing that I’m a little cautious about on that export front is we’re fully booked at the Pacific Northwest through the end of January. So, I don’t now how much more we could see layered there right now.

There were no changes in the U.S. soybean balance sheet with the ending stocks remaining at 245 million bushels, 2 million above the average trade guess. Were there any changes of note on the wheat side?

Angie: The wheat numbers weren’t changed from an overall standpoint. They did adjust the soft red winter wheat carryout down a little bit and did increase exports, but the overall change it looks like isn’t really one that is super surprising.

Wheat carryout came down 25 million bushels due to an increase in exports. It’s not unexpected. Soft red wheat carryout was lowered to 118 million bushels. We saw it a 90 million last year and they bumped it up last month to 148 million.

So, that increase in business that we’re seeing out of China has bumped exports up pretty decently year-over-year and now we just wait and see if it continues.

What did the report tell us on the world balance sheet side?

Karl: World wheat came out at 258.2 million metric tons. The trade was expecting 258.8 million metric tons. World corn carryout of 315.2 million metric tons and the trade was expecting 313.3 million.

World soybean carryout of 114.2 million metric tons and the trade was expecting 112.9 million. The soybean carryout was 114.5 million in November.

Angie: They left the corn production number in Brazil unchanged. That surprises me, but it’s not out of line from a traditional standpoint. December usually isn’t one that they’re going to make big adjustments in.

Karl: This kind of surprises me just a little bit. Ukraine corn production is up 1 million metric tons to 30.5 million.

Angie: Ukrainian corn exports were bumped up to 21 million metric tons. So, basically whatever increase in production we saw they bumped that up in exports. They reduced the Brazilian soybean number a little bit and increased Brazil’s exports a little bit.

Any final comments about the report as the trade turns its focus to USDA’s final crop summary and quarterly stocks reports next month?

Angie: Overall, I would say today’s report is really nothing. Now we’re just going to look and see what the cash market is going to do. We’re kind of trying to figure out how to wrap our heads around what we’re going to see from a demand standpoint.

Does China continue to come in and buy soft red winter wheat like they have been or do they transition over and look to buy other products? Or, do we see them just kind of slow down on that as a whole?

Now that this is out of the way, and we’ve got our round of Brazilian production updates, I feel like we’ve kind of established a range and just tread water for a while. Prices after the report are doing pretty much nothing.

Karl: I’m not seeing anything that would really warrant big buying and/or selling. I think we take this one out of the way and now we’re sitting here and it’s almost cliché, but we have three weeks left in the year and that holiday trade kicks in. I wouldn’t be too surprised if we aren’t range-bound until we get that January report.

Angie: I’m a little optimistic on price. I think we have support with everything we’ve got going on with the export market and some of that stuff with the Chinese demand, but just be aware of what your risk is. Get some targets on the pricing that you want to be looking at and then also recognize how long you are elsewhere.

If you have a lot of bushels in the bin that are unpriced and your just kind of holding on to this 5,000-bushel basis contract or a small percentage of what you’ve got, think about how it fits into the overall picture and don’t get caught rolling a loser.