Higher US grain exports remains under pressure

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.
Since the corn and soybean marketing year began on Sept. 1, shipments of the two crops plus wheat total 73.8 million tonnes (2.77 billion bushels) through January. This is by far the largest volume on record for that period.
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.
US 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 tonnes (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.
U.S. soybean exporters processed a monthly record 7.4 million tonnes (273 million bushels) of the oilseed in January, totaling 40.7 million tonnes (1.496 billion bushels) since Sept. 1.
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.
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 tonnes (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.
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 tonnes. This brings the total since September to 4.8 million tonnes, 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.
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.
Source: Times of India