Urbana, Illinois
September 8, 2008
Early USDA forecasts for the
2008-09 corn and soybean marketing year project substantial
declines in U.S. exports from the record levels reached in the
2007-08 marketing year, said a University of
Illinois Extension marketing specialist.
"The sharpest decline is projected for corn," said Darrel
Good. "With U.S. corn and soybean stocks expected to remain
tight this year, the pace of exports could have important price
implications as the year progresses."
The USDA currently projects U.S. corn exports for the marketing
year that just ended on August 31, 2008, at 2.425 billion
bushels. U.S. corn export inspections as of August 31 totaled
2.337 billion bushels, and exports reported in the weekly U.S.
Export Sales report through August 28 totaled 2.349 billion
bushels, Good said.
Census Bureau estimates are only available through June 2008. At
that juncture, cumulative Census Bureau estimates exceeded
inspections by 81 million bushels and estimates in the U.S.
Export Sales report by 55 million bushels. If that margin
persisted through August, exports will be near the USDA
projection. Exports of 2.425 billion bushels would be record
large, he said.
"For the 2008-09 marketing year, the USDA projects U.S. corn
exports at 2 billion bushels, or nearly 18 percent below exports
of the year just ended," he said.
According to Good, a number of factors point to prospects of
weaker demand for U.S. corn. Both wheat and coarse grain
production outside the United States are expected to be record
large in 2008-09. Foreign wheat production is forecast at 603.4
million tons, nearly 9 percent larger than the 2007-08 crops.
Feed use of wheat outside the United States is projected at 113
million tons, nearly 17 million tons more than fed last year, he
said.
"Most of that increase is expected in the European Union (EU),"
said Good. "That increase results in a projected decline in EU
corn imports of 354 million bushels. Although the United States
exports virtually no corn to the EU, the decline in import
demand makes more corn from other sources available to the world
market."
The USDA projects 2008-09 foreign coarse grain production at
760.3 million tons, nearly 5 percent larger than production in
2007-08. Fifty-eight percent of the year-over-year increase in
foreign coarse grain production is corn. Larger corn exports are
projected for South Africa and the Ukraine, he said.
The strengthening U.S. dollar is also generally believed to be a
negative factor for demand for U.S. corn. Although such
expectations appear logical, there is not a strong statistical
relationship between the value of the U.S. dollar and U.S. corn
export volume, Good said.
A more serious concern about export demand may stem from
prospects of a broader economic slowdown that could slow the
rate of increase in world meat demand and therefore the rate of
increase in corn feeding, he said.
"As of August 28, the USDA reported that 359 million bushels of
U.S. corn had been sold for export during the 2008-09 marketing
year. That is nearly 30 percent less than sales at the same time
last year," Good said.
Early sales do not always provide a good forecast of marketing
year exports, but at a minimum, importers are buying at a much
slower pace so far this year compared to both 2007 and 2006, he
said.
For the year ended August 31, 2008, the USDA expects U.S.
soybean exports to have totaled a record 1.145 billion bushels.
Export inspections through August 31 totaled 1.116 billion
bushels, and cumulative exports reported in the U.S. Export
Sales report through August 28 totaled 1.117 billion bushels,
Good said.
Through June, however, cumulative Census Bureau export estimates
exceeded USDA estimates by about 35 million bushels. "It appears
that exports will reach or exceed the USDA projection," Good
said.
For the 2008-09 marketing year, the USDA projects U.S. soybean
exports at one billion bushels, or nearly 13 percent less than
was exported during the year just ended, he said.
"The decline reflects expectations of a small decline in total
world exports and larger exports from Argentina and Brazil.
Imports by China are expected to account for 47 percent of total
world imports but are expected to be only about 1.5 percent
larger than imports in 2007-08," he said.
"That follows a 23 percent increase last year," he noted.
"Chinese consumption of soybeans is expected to increase by
nearly 5.5 percent, but the larger harvest there this year will
slow the rate of import growth."
Through August 28, the USDA reported that 279 million bushels of
U.S. soybeans had been sold for export during the 2008-09
marketing year. That is an 11.5 percent increase from
outstanding sales of a year ago, Good said.
Good said that 55 percent of the outstanding sales were destined
for China. "For now, U.S. exports appear to be benefiting from
some continued disruptions in exports from Argentina. The early
sales pace, while not a good prediction of marketing year
exports, is encouraging," he said.
By Bob Sampson, University of
Illinois |
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