By Doug Tenney, Leist Mercantile
Since December, numerous rumblings have inferred U.S. corn exports were too low. At that time many had projected U.S. corn exports would be increasing 200 million to 300 million bushels with corn ending stocks shrinking a similar amount. The frustration has been high as USDA seemed stuck in a rut with the January, February, and March WASDE reports unchanged. At those times a common thread suggested USDA was merely “punting,” kicking the can down the road waiting for more information in particular to South America corn production in Brazil and Argentina.
Last month China purchased 4 million tons, or 157 million bushels of U.S. corn. Yet, corn prices were unable to break above the highs seen in early February. In February and March, both corn and soybeans were firmly entrenched in a sideways price pattern. The March 31 USDA Perspective Planting Report was a bullish surprise, a game changer which had both corn and soybeans locked up their respective daily limits of 25 cents and 70 cents.
USDA estimated 2021 US corn acres would be 91.1 million acres with soybeans acres at 87.3 million acres. It got the attention of producers and end users alike. While the March 31 Perspective Plantings Report along with the U.S. Quarterly Grain Stocks Report do not provide the supply and demand tables, many were already doing the math, plugging in acres, yields, and demand to come up with ending stocks numbers. The results were most shocking. The numbers revealed soybeans needed perfect weather and record yields. Using current demand expectations, soybean ending stocks for next year would be similar to this year. It would mark the first time in history for soybean ending stocks to be very tight for both old and new crop. Some already have negative ending stocks for next year which cannot happen.
The March WASDE Report had U.S. soybean ending stocks at 120 million bushels. Private projections already have ending stocks below 100 million bushels. U.S. soybean imports are projected at 35 million bushels, up 20 million bushels with the January report. Those imports could be very difficult to achieve. While 20 million bushels is not a large percentage in total demand, it is a much larger percentage when looking at ending stocks of 120 million or even 100 million bushels. Here’s why. Brazil would be the logical source. Currently, export values and shipping rates during the U.S. late spring and summer months do not make economic sense for soybeans to be imported into the U.S. The late soybean harvest season in Brazil has pushed supplies availability at least one month later than normal. Brazil has a huge number of soybeans which are already committed to China during April and May. That pushes potential soybean imports into the U.S. into June at the earliest.
Wait. There is another complicating factor for those soybean imports into the U.S. The late Brazil soybean harvest and it’s late exports, now has demands for those boats to compete directly with boats needed to handle Brazil sugar exports. It could now be July or even later before any Brazil soybeans moving into the U.S. can logistically take place.
Putting the Brazil shipping scenarios into play contributes additionally to soybean prices not yet at a price which will ration demand. Western U.S. soybean crushers are already indicating lack of availability of adequate supplies for crushing during June to August. The market has been wrestling for months that soybeans supplies need to be rationed to meet demand.
The April 9th WASDE Report should publish changes for corn and soybean exports and ending stocks. Some are still suggesting U.S. corn exports could be near 2.9 billion bushels and corn ending stocks closer to 1.2 billion bushels.