"Softer export demand, along with a significant increase in U.S.
corn production in 2007, would provide a little more breathing
room in the tightening supply-and-demand balance sheet," said
Good's comments came as he reviewed U.S. corn
exports. The USDA expects U.S. corn exports during the current
marketing year to reach 2.25 billion bushels. At that level,
exports would be 103 million bushels larger than shipments of a
year ago and at the highest level since 1989-90.
Historically, marketing year U.S. corn exports have exceeded
2 billion bushels only eight times. Prior to last year, exports
had not exceeded 2 billion bushels since 1995-96 and had
languished in the range of 1.5 to 1.98 billion bushels.
"Exports started their recovery in the second quarter of the
2005-06 marketing year and were especially large in the summer
of 2006," said Good. "At 620 million bushels, exports in June,
July and August of 2006 were the largest since 1980 and were the
"Exports during the fall of 2006 were estimated at 592
million bushels, the largest since 1995. The pace of exports
remained large through the latest reporting week of Feb. 8."
The USDA reported cumulative export inspections from Sept. 1,
2006, through Feb. 8, 2007, at 949.2 million bushels, 138
million more than inspected during those same 23 weeks last
year. Cumulative exports estimated by the USDA in the weekly
Export Sales report had reached 983.6 million bushels by Feb. 8.
"It is typical for total shipments to exceed the amount
inspected," said Good. "The official source of corn export
estimates, however, is provided by the Census Bureau. It is not
unusual for Census Bureau estimates to exceed those in the
USDA's report of exports."
For the current year, Census Bureau estimates are available
through December 2006. At the end of December, cumulative
estimates from the Census Bureau exceeded those of the USDA by
22.3 million bushels. If that margin of difference persisted
through Feb. 8, cumulative exports were likely near 1.006
billion bushels, meaning that exports averaged 43.74 million
bushels per week through the first 23 weeks of the marketing
year, Good noted.
"To reach the USDA projection of 2.25 billion bushels for the
year, shipments need to average about 42.9 million bushels per
week during the last 29 weeks of the year, for a total of 1.244
billion bushels," he said. "As of Feb. 8, the USDA reported that
475.5 million bushels of corn had been sold for export during
the current marketing year, but not yet shipped.
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"That figure implies that new sales need to total only about 770
million bushels to reach the USDA projection. That is an average of
26.6 million bushels per week."
The large increase in year-over-year export commitments of U.S.
corn this year reflects larger purchases by Mexico. As of Feb. 8,
the USDA reported that Mexico had purchased 255 million bushels of
U.S. corn for delivery during the current marketing year. That
compares with purchases of 148 million at the same juncture last
year. Mexico accounts for 40 percent of the year-over-year increase
in export sales of U.S. corn.
"In addition to increased demand from Mexico, U.S. corn exports
have benefited from at least four other factors," said Good. "First,
a continuation of relatively small exports from China has provided
the United States with a larger share of the world market. South
Korea, for example, has purchased about 10 million bushels more U.S.
corn this year than purchased last year, as a result of a limited
supply from China.
"Second, a small 2006 corn crop in Argentina resulted in a
200-million-bushel reduction in Argentine corn exports, also
providing the United States with a larger share of the export
market. Third, the small world wheat crop of 2006 likely increased
world demand for corn."
Finally, he added, strong world demand for corn will push
consumption to a record level, forecast at 28.7 billion bushels
during the current marketing year.
The strong world demand for U.S. corn has been one of the factors
contributing to the significant strength in corn prices over the
past five months.
"However, demand for U.S. corn may weaken somewhat over the next
several months," he said. "The rebound in Argentine corn production
suggests increased competition for U.S. corn. Record production in
Brazil this year may also result in another 30 to 40 million bushels
of exports from that country.
"Finally, a significant rebound in world wheat production could
soften the demand for U.S. corn. The wild card will continue to be
the magnitude of Chinese corn exports."
[Text copied from file received
from the University
of Illinois College of Agricultural, Consumer and Environmental