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Wisner notes that USDA statisticians reduced their estimate of corn exports to only 950 million bushels for the current marketing year in the Jan. 11 supply-demand report, which would be the least in 40 years, and would mean a 36% cut from 2011. And he says if the estimate falls short of the 950 million, more corn would be available for domestic use.
To date, exports are about 50% below prior year levels, and the 539 million bushels exported by early January would put the year total at 749 million bushels if the pace was retained. With lower exports and more available for feed, Wisner’s feed use scenarios would not be as stressful. He says the need for rationing would not be negated, but the feed reductions would be more modest.
But will exports continue to languish? Wisner says reaching the USDA projection would only require 411 million more bushels to be exported between now and the end of August. Based on the past year’s export pace for the balance of the marketing year, the export pace would need to slow by nearly 16%.
U.S. corn exporters have been facing stiff competition from feed wheat in several countries along with corn from the Ukraine and second-crop corn in Brazil that has been priced under the U.S. corn market. Those supplies will not last, and many have already diminished to the point that foreign exporters have closed down. Southern Hemisphere feed wheat, just now being harvested, is down about 25% in yield in production, and the European Union is expected to be in the market buying substantially more feed grains than usual. However, the EU will not buy U.S. corn to avoid biotech issues.
Wisner concludes by saying the short corn crop has already reduced ethanol and export use of U.S. corn, but not feed use, despite higher prices. And he says without that, corn supplies could be tighter than already indicated. He will be watching for the next quarterly grain stocks report at the end of March, along with livestock inventory, and marketing weights to determine if the second quarter corn disappearance confirms any change in the trend from the first quarter.
He says export demand has been weak and if the global market wants Brazilian corn it will have to sort it out from all of the Brazilian soybeans headed to export terminals, which he perceives as an increased demand for U.S. corn to be exported. The two issues that will have a bearing on demand, says Wisner, are the export price of alternative feeds and the potential for any shipping delays. While the latter is unknown, the former points to corn as a bargain:
- $340 for Australian wheat
- $340 for French wheat
- $310 for U.S. soft wheat
- $305 for U.S. corn
Corn stocks will be tight before the end of the current marketing year, causing spot shortages. U.S. livestock feeding has been aggressive in light of short feed supplies, and unless there are cuts in the rate of feeding, livestock feeders will face critical decisions. Exports have been cut back due to high prices, but with the disappearance of alternative feed grains, U.S. corn exports could resume by the end of the marketing year, putting more pressure on the supply.