At the beginning of the current marketing season, exports of US corn were running poorly. At the end of September, 35% less corn was exported from the US compared to the previous season.
This has changed drastically. On 8 March 2018, the USDA reported exports as heavy as it has done since the 1990s. Now the export deficit this season is only 4%. If orders remain at their highest level, the USDA will need to raise its export targets and reduce the end-of-stock estimates in the next USDA report.
What are the reasons for this development?
In 2016, Brazil suffered from one of the worst droughts in decades and maize exports were extremely low at the end of 2016 and the first half of 2017. This benefited the exporters in the USA.
Low export prices and high availability of corn on the world market have caused competition from the surplus regions of Argentina, Brazil and the Ukraine since the beginning of 2018.
However, a very serious drought in Argentina is reducing the supply from South America. Yesterday, the Rosario Grains Exchange lowered its estimate for the 2017/18 corn crop to 32 million tonnes from its original 35 million tonnes.Last year, Argentina harvested 40 million tons.
How big the Brazilian corn crop will be this year is not certain yet. For this reason, more and more Asian countries are buying their corn import needs in the US.
Text: HANSA Derivatives Trading GmbH
