KANSAS CITY — Much better-than-expected corn export sales in the latest week has led to talk about whether the trend of lower U.S. corn sales abroad may be ending. Rich Nelson, chief strategist at Allendale, Inc., in McHenry, Ill., and a corn market expert, was reluctant to predict a reversal in the downward direction of corn exports but did forecast robust export sales, comparable to last week’s, for the next three to five weeks.
Because of the “horrible pace” of recent corn exports, though, he emphasized that it would take several very strong weeks even to stay on track with the U.S. Department of Agriculture’s estimate of 1,150 million bus in total U.S. corn exports for the 2012-13 crop year ending next Aug. 31.
U.S. corn exports from Sept. 1 to Nov. 15, 2012, were 11,942,000 tonnes, down 45% from the same period a year ago, said the U.S.D.A. in its Weekly Export Performance Indicator for the week ended Nov. 15. Expectations for a smaller total for the current crop year’s corn exports followed the downward trajectory that began a few years ago.
The U.S.D.A. reported Friday that net corn export sales for the week ended Nov. 15 totaled 958,600 tonnes, compared with trade expectations of 250,000 tonnes to 400,000 tonnes.
“It is good to see the recent bounce, and exports are likely to stay strong for the next three to five weeks” because most buyers are purchasing January to March futures contracts, Mr. Nelson said.
“By the end of December, they will be buying for late March and April, when there will be competition from South America,” he said.
Parts of South America were experiencing planting delays because of excessive rains and flooding, which might negatively affect yields. Mr. Nelson said that, even if the U.S.D.A. trimmed its forecast for the corn crop in Argentina from 28 million tonnes to 26 million tonnes and, in Brazil, from 70 million tonnes to 68 million tonnes, the total South American corn crop would be larger than last year’s and would be likely to soak up a lot of world export demand.
He said the core problem responsible for the downward trajectory of U.S. corn exports since 2009 was that “because of this year’s drought and minor issues in the previous two years,” the United States has had short corn crops in the last three years. He added that an 8% increase in ethanol production from 2009 to the current crop year also resulted in less export availability.
Next year’s crop may play out very differently, Mr. Nelson said. Although it was difficult to predict the future, he said the trend line yield for next year is 163.5 bus an acre (compared with 122.3 bus in 2012-13), an “astounding number” and one that “no one would believe is possible” given recent history. He said that even if the yield falls below trend line and is more in the range of 156@159 bus per acre, ending stocks would be above 2 billion bus.
“Our firm is very bearish on prices,” he said. “If ending stocks go above 2 billion bus, that would suggest futures in the $4-per-bu range.”
In the immediate weeks ahead, corn futures prices may advance 15c or so as world supplies stay tight and the U.S. picks up export business, Mr. Nelson said. As for the larger picture for U.S. corn exports, he said, “I see three to five weeks of good exports and then I’m not going to get too excited.”