The current marketing year has been fruitful for US corn exporters and tougher for US wheat exporters, but both American grains may not have the finish to 2018-19 that analysts are hoping for amid heavy global competition. Wheat is nearly out of time for recovery as the marketing year ends on May 31. Corn has until Aug. 31, though enormous South American crops will offer challenges to US merchants.
The US Census Bureau published February trade data on Wednesday showing the United States shipped 3.6 million tonnes of corn that month, the smallest monthly volume since December 2017. Lighter corn exports may be attributable to the logistical problems that US shippers had been facing with flooded rivers and clogged railways. Weekly export inspection data suggests that March exports recovered to around 4.8 million tonnes.
Through the first half of 2018-19, the United States shipped 49 percent of the US Department of Agriculture's full-year forecast of 58.4 million tonnes, or 2.3 billion bushels. This implies that second-half shipments would need to average just under 5 million tonnes per month. That number is nearly equal with recent averages, excluding last year's anomalously large volumes. But the issue is whether US exporters can sell enough corn given the strong harvests in the Southern Hemisphere.
Through April 11, US corn commitments for 2018-19 totalled 44.7 million tonnes, meaning 13.7 million still needed to be sold to reach USDA's export forecast by Aug. 31. For reference, about 11 million tonnes were sold during the same period last year, which coincided with big crop losses in Argentina and a disappointing crop in Brazil. More than 15 million tonnes of US corn were sold from mid-April through August in 2016 when Brazil harvested one of its worst-ever corn crops. Both South American countries had strong crops in 2017, and just over 6 million tonnes of US corn were sold during that period.
This year is more analogous to 2017 in terms of the South American corn crops, and both countries could have record harvests this year. USDA sees Argentina's crop rising to a record 47 million tonnes and Brazil's total crop reaching 96 million, but some industry analysts think Brazil's harvest could surpass 100 million. Official export data combined with weekly inspections would imply that about 1.1 million tonnes of US corn would need to be shipped per week from now through August to meet USDA's expectations, and that is assuming all the corn is sold.
As of April 11, US corn sales for the next marketing year totalled about 2 million tonnes, roughly the same amount as a year ago. US wheat sales for 2018-19 totalled 24.9 million tonnes through April 11. Only 800,000 more tonnes of wheat would need to be sold in the following seven weeks to reach USDA's export projection of 25.7 million tonnes, or 945 million bushels.
That is not a lofty goal, though shipping all this wheat might be the bigger issue. About 5.4 million tonnes of wheat were still awaiting shipment as of April 11, and given the May 31 deadline, exports would need to average around 750,000 tonnes per week. That weekly target is larger than any other week this marketing year and would easily be a record pace for the time of year. Even though exports at 945 million bushels or below are disappointing, especially as earlier predictions exceeded 1 billion, the unshipped bookings would be rolled into the 2019-20 marketing year.
In February, US exporters shipped 2.26 million tonnes of wheat, the largest February volume in six years and the largest monthly volume since September 2017. Total US wheat exports halfway through the 2018-19 marketing year implied that shipments needed to reach nearly 2.5 million tonnes per month through May to end up at USDA's 25.7 million tonnes. In the third quarter, the average was about 2.2 million. US wheat demand has certainly increased in the second half of the marketing year as USDA had predicted, but not to the degree originally expected. The pickup would be based on a shrinking of supply in top exporter Russia.
Russian supplies have indeed shrunk but perhaps not soon enough. At the end of March, cumulative Russian wheat exports finally dipped below the previous year's shipments and remain fractionally below 2017-18 as of April 11. But 2018-19 exports were 6.5 percent above the prior year at the end of February. US wheat has also faced competition from French, Romanian and Ukrainian wheat in recent months, as all three countries have recently been awarded tenders by top importer Egypt.
The competition will continue into the 2019-20 year for US wheat as the Russian harvest is expected to rebound from last year's mediocre result. Consultancy SovEcon sees Russia's 2019 wheat crop reaching 83.4 million tonnes, up about 16 percent from last year.
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