Near-record U.S. corn exports in 2017/18, ample supplies, combined with a continued lack of competition and continued strong foreign demand, have brightened export prospects in the second-half of 2017/18 (October-September).
This month, exports are forecast at 61 million tons, which if realized, would be the second-largest in history. The previous record was 61.8 million set in 1979/80.
Exports by key competitors, mainly Brazil, Argentina, and to a lesser extent Ukraine, have been slower than anticipated. Brazil’s slower pace is attributed to the current market dynamics which favor shipping soybeans over corn, a modest decline in second crop area, and below-normal rainfall in major producing regions.
With strong demand overseas, soybeans get priority access to transportation and export channels. For Argentina, the impact of hot and dry weather in February 2018 on corn prices has diminished its competitiveness against U.S. corn.
The recent depreciation of the peso could boost its ability to compete with U.S. corn, but the shipping pace reflected in the weekly port loadings has remained slow.
With relatively higher prices for Ukraine corn, many importing countries have turned to U.S. corn. U.S. corn exports for March through May were exceptional, with larger volumes to traditional markets (Mexico, Colombia, Japan, and Korea) as well as second-tier markets (Vietnam, Spain, Egypt and other North African countries).
Monthly inspection data indicates strong shipments for June. In addition, outstanding sales at the end of June were at a record, with sales to many countries up year-over-year, suggesting strong shipments for the rest of the year.
The strength in exports, however, is currently forecast to diminish year-over-year in 2018/19, as both importing and exporting countries adjust to trade dynamics.