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U.S. corn exports are like a well that is going dry. Last week, inspections were the second lowest of the season at only 11.9 MB. Putting this into perspective, we must ship 48.0 MB each week to reach USDA’s target of 2.150 BB which seems like a dream for the moment. So far, the pace of shipments this season is running 45.7 percent below the 5-year average. Why the decline? The primary reason for the drop is that Brazilian corn has been authorized for export in 2023 to China, possibly as much as 5.0 million tons. China’s intent is to replace supplies that may no longer be available from Ukraine because of the conflict with Russia. Keep in mind that China has no allegiance to the U.S., as their goal is to reduce dependence upon us for their grain needs. That said, a weather threat may be necessary in South America to support a price advance.
Until the past couple of sessions, soybeans have been supported from strong exports and hope that China will ease its Covid-19 restrictions. Last week, inspections were impressive at 74.3 MB. However, there are some cracks developing. Namely, the export pace has fallen 11.4 percent during the past 3 weeks, while shipments to China have declined 13.4 percent, as their interest is turning to the South American crop. As mentioned in past comments, soybean exports tend to peak in November and decline, on average 65-85 percent, through the end of the marketing year unless there is a production shortage in Brazil. However, they are currently on track to produce a record crop. That said, with China’s economy on the blink, putting demand into question, a weather scare will be needed to maintain higher values.
There is not much that can be said for the defense of wheat. The U.S. winter wheat crop is the poorest since 2012 which would send prices soaring in most cases. However, that is not happening for a couple of reasons. The first is that crop conditions are mostly favorable for our competitors. Second, exports are dismal. Although inspections rose last week to 7.2 MB, they must average 13.9 MB on a weekly basis to reach USDA’s projection of 775 MB. Right now, our pace of shipments is running 42.5 percent below the 5-year average. When you look at the broad picture, the U.S. accounts for only 10.1 percent of the global market share of exports. Long story short, there are others who have a bigger piece of the pie.
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