"Last year, soybean export activity was
very brisk in the first quarter of the year but dropped sharply in
the last half of the year due to limited supplies," said Darrel
Good. "It is a little early in the 2004-05 marketing year to draw
conclusions from the current pace of export activity, but the slow
pace of corn shipments is a concern.
"Sales need to be sustained at high
levels for the market to maintain confidence in the USDA forecasts.
Chinese export activity will be an important factor in determining
demand for U.S. corn. For soybeans, Chinese buying and the progress
of the South American crop will be important."
Good's comments came as he reviewed
the corn and soybean markets. As the 2004 corn and soybean harvest
is concluded, the markets will focus on the availability of storage
and the rate of selling by producers. Assuming the November USDA
crop production report confirms the current projections of crop
size, however, the rate of use of the crops will become top priority
for price direction.
"The demand focus will tend to be on
exports for two reasons," said Good. "First, there is more
uncertainty about the magnitude of exports than the magnitude of
domestic use for the year, and second, weekly USDA export data are
available for the market to digest.
"The weekly export inspections
report, released on Monday morning, reveals the amount of crop
inspected for export during the previous week, ending on Thursday.
The report allows the market to monitor the rate of inspections in
relation to the USDA's projection of exports for the year and in
relation to the rate of inspections in previous years. Weekly
inspection figures are frequently revised in the following weekly
report. The revisions are almost always higher than the initial
The weekly export sales report,
released on Thursday morning, reveals the amount of crop exported
and the magnitude of new sales during the week ended on the previous
Thursday. This report allows the market to monitor the rate of
shipments and the rate of commercial export sales by destination.
Again, the weekly report provides for an evaluation of actual export
business in relation to the level of exports projected for the year.
Good noted that the USDA also has a
daily export reporting system and requires exporters to report sales
of 100,000 tons or more that are made to a single buyer. The Census
Bureau reports exports by commodity on a monthly basis, typically
about six weeks after the end of the month. The Census Bureau
estimates are official and are reflected in the USDA's supply and
demand balance sheets for previous marketing years.
"The corn and soybean marketing year
begins on Sept. 1, so for the 2004-05 marketing year, about eight
weeks of export inspection data and seven weeks of export data are
available from the two weekly reports," said Good. "Cumulative
export sales data are available from the time of the first sale for
delivery during the current marketing year."
[to top of second column in
Export inspections for corn from
Sept. 1 through Oct. 28 totaled 267 million bushels, about 20
million less than the total of a year ago. Inspections have averaged
32 million bushels per week during the first eight weeks of the
year. To reach the USDA projection of 2.075 billon bushels for the
year, inspections need to average about 41.4 million bushels per
week from now through August 2005. Cumulative exports during the
first seven weeks of the year, as reported in the USDA's export
sales report, exceeded inspections by 16 million bushels. The report
indicates weekly shipments now need to average 41 million per week
to reach the USDA projection for the year.
"Unshipped export sales of corn as
of Oct. 21 were estimated at 336 million bushels, compared to 379
million bushels on the same date last year," said Good. "Japan,
Taiwan and Mexico have smaller outstanding purchases than at this
time last year. Importantly, however, both shipments and outstanding
sales to South Korea are large, compared to very little activity at
this time last year.
"To reach the USDA projection, new
corn sales need to average only 33 million bushels per week for the
rest of the year. The average for the last three reporting weeks was
51 million bushels."
Export inspections for soybeans from
Sept. 1 through Oct. 30 totaled 195 million bushels, about 15
million above the total of a year ago. Inspections have averaged
about 23.5 million bushels per week so far in the 2004-05 marketing
year. Cumulative exports for the first seven weeks of the year, as
reported in the export sales report, were about seven million
bushels less than inspections.
"Average exports of about 19 million
per week are needed for the rest of the year to reach the USDA
projection of 1.025 billion bushels for the year," said Good.
"However, there is a clear seasonal pattern for U.S. soybean exports
because of the influence of South American production. Weekly
shipments tend to be large from October through March and small from
April through September.
"A weekly rate of about 30 million
bushels from October through March 2005 would be consistent with the
current USDA projection."
Unshipped export sales of soybeans
as of Oct. 21 totaled 316 million bushels, compared with 399 million
on the same date last year. The total of exports and unshipped sales
was about 77 million bushels (15 percent) less than on the same date
last year. Business to Europe, Japan, Mexico and Taiwan is a little
slower than last year.
"However, business with the largest
buyer, China, is at the same high level as a year ago," said Good.
"To reach the USDA's projection for the year, new sales to all
destinations need to average about 13 million bushels per week. The
average for the last three reporting weeks was 35.3 million
of Illinois news release]