Dismal corn exports seen likely to meet U.S.D.A. target
WEST BEND, IOWA — Karl Setzer, market analyst at MaxYield, said he expects a modest pickup in corn exports soon so that the most recent projection of a marketing year total of 825 million bus by the U.S. Department of Agriculture may be met or “fractionally” surpassed.
In the most recent Feed Outlook published March 12, the U.S.D.A. projected a 41-year low for U.S. corn exports in marketing year 2012-13. Mr. Setzer said logistics will push a hefty part of that total into the second half of the marketing year beginning in March. He expects the torrid pace of U.S. soybean exports to slow significantly when the South American soybean crop becomes available this spring.
He said some importing countries, especially China, are focused on buying U.S. soybeans to meet immediate needs and they are putting off buying corn. As a result, soybean shipments are monopolizing U.S. port capacity. He added that cheaper South American corn was also winning good export business for now.
“South America has lower costs of production,” he said. “They can get corn out of the country for less because of factors like not having ethanol demand.”
And, he noted, importing countries that need additional animal feed may easily turn to wheat from Ukraine and the Black Sea region.
Nevertheless, Mr. Setzer expects the U.S. corn export picture to appear brighter in the second half of the 2012-13 marketing year when the focus of soybean exports switches to the Southern Hemisphere.
He also said it was important to note that, though U.S. corn exports remain historically low, many U.S. corn byproducts such as distillers’ dried grains and solubles and corn-fed livestock remain in strong demand by other countries.
“Our pork exports have been through the roof,” he said.
The U.S.D.A. published its latest Feed Outlook on March 12, projecting corn exports to fall to 825 million bus, the lowest level since the 1971-72 marketing year. On the other hand, projected domestic corn feed and residual use for 2012-13 was boosted by 100 million bus because of record corn imports by the United States.
Mr. Setzer said the current price for corn in the domestic cash market was about $7.40 a bu and about $7.80 a bu in the export market. Those prices have deterred foreign buying but not domestic feed usage because meat and poultry producers may pass on their higher costs to consumers. Food inflation has been running at about 2.9% in the 2013 calendar year, Mr. Setzer said.
The U.S.D.A. may be between 200 million bus and 300 million bus too low in its estimate of domestic feed demand for corn, he said. In the latest Feed Outlook, the U.S.D.A. projected feed and residual use at 4,550 million bus for the 2012-13 marketing year ending Aug. 31. The U.S.D.A. also pegged ending stocks of 632 million bus for 2012-13.
“Carryout could be reduced to 300 million bus if we feed that extra amount,” Mr. Setzer said.