U.S. Corn Exports Showing Signs of Improvement
By S. Patricia Batres-Marquez
Decision Innovation Solutions, 11107 Aurora Avenue, Urbandale, IA 50322
The U.S. export sales published by USDA-Foreign Agricultural Service (FAS) November 9, 2017, reported weekly net corn exports(1) sales reached a volume of 93.09 million bushels (2.364 million metric tons) from October 27 to November 2, 2017. Net corn exports increased 61.14 million bushels (191.4 percent) from the previous week, and 48.56 million bushels from the previous four-week average (92 percent). Weekly export sales(2) during the ninth week of the 2017/18 marketing year (19.28 million bushels) were down 18.1 percent relative to the previous week (23.55 million bushels) (see Figure 1). As Figure 1 shows, except for weeks one and eight, 2017/18 weekly export sales have been below weekly sales during previous marketing years.
Figure 1. U.S. Corn Weekly Export (All Countries)
Accumulated(3) corn exports during the first nine weeks of the 2017/18 marketing year (226 million bushels) increased 9.3 percent from the previous week, but were down 36 percent year-over-year (351 million bushels) (see Figure 2). Except for week eight, corn outstanding export sales contracts (outstanding sales(4)) have been increasing since week four of the 2017/18 marketing year. Outstanding export sales during week nine of the current marketing year (538 million bushels) were up 15.9 percent from the preceding week (464 million bushels). The latest outstanding export sales were down 14 percent relative to the same period in the 2016/17 marketing year (624 million bushels) (see Figure 3). With this level of accumulated exports and outstanding sales, total commitments(5) by November 2, 2017, were up 13.9 percent to 763 million bushels compared with a week earlier (670 million bushels). Total commitments during the first nine weeks of the 2017/18 marketing year were down by 211 million bushels (22 percent) relative to the same period in the 2016/17 marketing year (974 million bushels), but 246 million bushels (48 percent) ahead when compared with total commitments during the first nine weeks of the 2015/16 marketing (517 million bushels) (see Figure 4).
Figure 2. U.S. Corn Accumulated Weekly Exports (All Countries) Figure 3. U.S. Corn Outstanding Weekly Sales (All Countries)
Figure 4. U.S. Corn Total Exports Commitments (All Countries)
U.S. Corn Exports to Main Markets
Mexico is the main export market for U.S. corn. Despite lower U.S. corn exports this marketing year compared with last year, U.S. corn exports to Mexico have been increasing during the first nine weeks of the current marketing year. With the North American Free Trade Agreement, Mexico and the United States have removed all tariffs and quantitative restrictions on agricultural goods, creating opportunities for U.S. corn exports to that country.
Mexico’s total commitment as of November 2, 2017, reached a volume of 328 million bushels with 99 million bushels in accumulated sales and 229 million bushels in outstanding sales. Mexico’s total commitments made up 43 percent of all countries total commitments (763 million bushels). During the first nine weeks of the 2017/18 marketing year, Mexico’s total commitments were ahead by 49 million bushels compared with total commitments during the same period last marketing year (279 million bushels). Mexico’s accumulated sales during the first nine weeks of the 2017/18 marketing year were up 35 percent from the same period of the previous year (74 million bushels). In addition, outstanding sales were up by 24 million bushels compared with last year (205 million bushels) (see Figure 5). Based on USDA’s World Agricultural Supply and Demand Estimate (WASDE) report published November 9, 2017, Mexico’s demand for U.S. corn is expected to increase this marketing year. This forecast is supported by Mexico’s lower sorghum production prospects this year.
Japan is the second largest market for U.S. corn, but during the first nine weeks of the 2017/18 marketing year, Japan’s total commitments fell by 19 million bushels (15 percent) to 103 million bushels compared with the same period last marketing year (122 million bushels). Japan’s total commitments as of November 2, 2017, included 33 million bushels in accumulated exports and 70 million bushels in outstanding sales (see Figure 5).
Compared to the previous week (October 20 to October 26, 2017), total corn export commitments this reporting week (October 27 to November 2, 2017) increased for Mexico (16 percent), Japan (15 percent), South Korea (117 percent), Colombia (12 percent), Peru (1 percent), and Taiwan (3 percent). U.S. corn exports to these six countries made up 75 percent of U.S. total corn exports in the 2016/17 marketing year, with exports to Japan, South Korea, and Taiwan comprising 36 percent of total U.S. total corn exports. According to a USDA-FAS Grain World Market and Trade report published November 9, 2017, corn trade policies in these three Asian markets are beneficial for the United States as well as for Brazil, which is the main U.S. corn competitor in those markets. Therefore, FOB prices and freight costs are the main determinant of increased market share in Japan, South Korea, and Taiwan.
Figure 5. U.S. Corn Accumulated Exports and Outstanding Sales by Selected Countries (First Nine Weeks)
U.S. Corn Outlook for 2017/18
According to the November 2017 WASDE report, 2017/18 U.S. corn production is projected at 14.578 billion bushels, up 298 million bushels compared with last month’s projection. The new forecast is due to a projected record yield forecast at 175.4 bushels/acre, which is up 3.6 bushels/acre from the October forecast. The corn outlook for the current marketing year also includes higher feed and residual use forecast at 5.575 billion bushels, and an unchanged forecast for corn for ethanol production at 5.475 billion bushels.
In addition, the November forecast for 2017/18 U.S. corn exports is at 1.925 billion bushels. The 75 million bushels increase from last month’s forecast (1.850 billion bushels) is due in part to stronger export sales to date; however, this forecast indicates a reduction of 368 million bushels (16 percent) from the 2016/17 corn export estimate (2.293 million bushels). Intensified competitiveness of supplies in South America (i.e., Argentina and Brazil) supports the lower 2017/18 corn export forecast compared with last year. This is a critical point considering forecast 2017/18 corn ending stocks (2.487 billion bushels) are expected to build to a higher level from the 2016/17 marketing year. Based on 2017/18 U.S. corn exports forecast, the share of export to total U.S. corn production would decline to 13.1 percent compared with 14.8 percent and 14.4 percent, the share in 2015/16 and 2016/17, respectively. The volume of U.S. corn total export commitments realized so far represents 40 percent of the November corn export forecast for the current marketing year. Overall, 2017/2018 corn export forecast is lower than 2016/2017; however, there are signs of improvement as the current marketing year progresses.
Batres-Marquez, S. Patricia. 2017. “U.S. Corn Exports Showing Signs of Improvement." Renewable Energy Report, Agricultural Marketing Resource Center, Iowa State University. November.
(1)Net Sales or Net Changes - The sum total resulting from new export sales, increases resulting from changes in destination, decreases resulting from changes in destination, decreases resulting from purchases from foreign sellers, and cancellations resulting from contract adjustments, buybacks, loading tolerances, changes in marketing year, or change in commodity.
(2) Weekly Exports - Shipments of reportable commodities exported against sales for a reporting week Friday through Thursday.
(3)Accumulated Exports - Accumulated shipments of reportable commodities from the beginning of the marketing year (for each commodity) to the current week ending date.
(4)Outstanding Sales - The total outstanding export sales contracts by country and/or commodity that have not been shipped at any given time during the marketing year.
(5)Total Commitment - The grand total of outstanding sales plus accumulated exports by country and/or commodity at any given time during the marketing year.