Corn exports from the United States, the world’s top seller of the grain, will struggle to hit the government target amid worries about U. S. corn quality and competition from other feed grain suppliers.
The 2009 U. S. corn harvest was the longest in decades due to rainy, cool weather that cut the quality of the record-large crop. Major importers such as South Korea and Japan have begun talks with U. S. suppliers to renegotiate purchase terms.
The U. S. Agriculture Department will need to trim its U. S. corn exports forecast by 50 million to 100 million bushels (1.27 million to 2.54 million tonnes) from its latest estimate of two billion bushels (50.8 million tonnes) for the September 2009 to August 2010 marketing year, analysts said.
“The export sales numbers haven’t been too bad, but the actual shipments have been underperforming the pace we need to get to the forecast,” said Doane Advisory Services analyst Marty Foreman.
U. S. exporters have sold nearly 30 million tonnes of corn for 2009-10 shipment, but about 40 per cent of it remains unshipped so traders will be keenly watching USDA’s weekly tally of grain inspected for export in the months ahead.
“In order to reach the USDA number we have to average weekly export inspections of 43 million bushels and we’re just not going to do that. Seasonally, we usually do a lot less in the summer time than we’re doing right now,” said Charlie Sernatinger, analyst with Fortis Clearing Americas.
Corn export inspections over the past four weeks have averaged about 28.5 million bushels, USDA data showed.
Lagging U. S. exports
Corn shipments through the first half of the marketing year have at times been displaced by record shipments of soybeans, which are loaded onto ships with the same equipment.
But as soybean exports wind down from an historically heavy first half of the marketing year, corn exports may still lag due to competition from cheaper South American corn and big global supplies of less expensive feed-quality wheat.
Argentina and Brazil are the world’s second-and third-largest corn exporters behind the United States.
“It’s being chipped away from several different angles. I think we’re going to continue to be pretty disappointed by the pace of sales all season long,” Sernatinger said.
Brazilian corn is currently about $5 a tonne more expensive than U. S. corn, which is around $165 to $166 per tonne for March shipment, not including freight. But Argentine corn is $161 for March and even less for shipment later in the spring.
Undercutting them all is $150-per-tonne feed wheat from Brazil and the Black Sea region, which some livestock feeders use in place of corn if prices are low enough.
Ideal weather during the South American growing season has bolstered corn production prospects and dragged down prices.
Anticipating a bumper corn crop of perhaps more than 20 million tonnes, Argentina has already authorized exports of up to 10 million tonnes for 2009-10. USDA expects Argentine exports of 9.5 million tonnes.
Brazilian 2009-10 corn exports were seen at nine million tonnes, up nearly 30 per cent from a year ago, USDA said.
The subpar quality of a larger-than-normal share of the 2009 U. S. corn crop added to the cautious U. S. export outlook, analysts said.
Traders in Asia said Japan, the top U. S. corn importer in the world, may buy on million tonnes of South American corn this year due to U. S. quality woes in its biggest purchases of non-U. S. corn in more than a decade.