Friday, February 10, 2017

Corn exports up 67% or 17%; depends on U.S. relationship with Mexico, our biggest corn exporter

The U.S. Department of Agriculture's World Agricultural Supply and Demand Estimates report tallies that 819 million bushels of corn have been shipped in 2016-17 and another 802 million bushels are on the books—a 67 percent increase over the same time last year, Todd Hultman reports for DTN The Progressive Farmer. "However, USDA's export estimate for all of 2016-17 is up just 17 percent from last season's 1.898 billion bushels. Why the big gap?"

"Playing USDA advocate, we could say USDA is erring on the side of caution and, after all, we don't know how Mexico, the biggest U.S. corn customer, is going to respond to President Donald Trump's attempts to reform NAFTA," Hultman writes. "On the other hand, NAFTA is not going to be renegotiated overnight, and the current export season only has a little more than six months left." It also doesn't help that Trump has demanded that Mexico pay for a border wall. (DTN graphic: U.S. corn prices remain competitive in early February, far enough below Brazil's prices to favor more U.S. export business ahead)
"It could also be said USDA is reluctant to hike its export estimate while Brazil's crops are doing well," Hultman writes. "Brazil's government just estimated its corn crop at 87.4 million metric ton on Thursday, up from last year's 67.00 million metric ton. But that argument also doesn't go very far. Even in a good year, Brazil's corn exports don't typically pick up until July, which means that U.S. corn exports still have at least four more months of active business."

"One year ago at this time, USDA showed 490 million bushels of corn shipped, which means that 1.408 billion bushels of corn were shipped in the final 6 3/4 months of the season," Hultman writes. "This year, 819 million bushels of USDA's 2.225 billion bushels estimate have already been shipped, meaning USDA expects no more corn will be shipped from this point on than what we saw last year. But if we compare the two years, 2016-17 clearly has the more bullish edge. This year, Brazil's real is 27 percent more expensive, leaving U.S. corn prices with a significant export advantage that was not there a year ago."

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