The U.S. Department of Agriculture (USDA) released its weekly U.S. Export Sales Report on Thursday. Once again, we’re seeing a neutral report this week. However, Allendale commodity broker Greg McBride said that, while the numbers are within expectations, they are still quite low.
“Well, it’s mostly neutral across the board for corn and beans,” McBride said. “There was a bearish tilt to bean meal. But the bigger issue here is not that these numbers are within the range of estimates; it’s how low these numbers actually are. We’re getting to the end of the old crop marketing year within the next five weeks, and corn and bean sales have been very, very slow for months now on the old crop side of things. That’s going to send some waves through the new crop side of the balance sheet when we have to adjust our ending stocks or export demands. On this week’s report, we saw net cancellations of old crop corn of 88,000 tons. We saw 62,000 tons for old crop bean sales. On the new crop side, they weren’t much better: 107,000 tons sold for corn and 176,000 tons sold for beans. So, at the end of the day, what has been driving this market has been the demand for corn and beans, but, as we’ve seen over the last few months, that demand is not necessarily there- especially in old crop. That could hurt us as we start to really focus in on this new crop and the new crop balance sheet once we get into that new crop marketing year in September.”
McBride added some advice for farmers as they navigate through the current market conditions.
“Well, the thing to watch is, obviously, how the USDA will still need to make some adjustments when it comes to Brazilian corn exports, which could flow in and be positive to our own export demand on new crop corn,” McBride said. “The biggest thing you have to be aware of is when you see these problems start to mount, at some point the USDA will recognize that we are deficient on the export side of things for old crop, and that will lead into your beginning stocks for new crop. So, that could put a little bit more of a bearish tilt, and if we don’t have a production issue- let’s say we don’t have a little bit of yield drag- that will be a hurdle to overcome as we go into harvest time. That’s going to be where producers need to be looking at there marketing, see where they’re at, and see if they need to be making a few more sales if they know that they’re going to have a crop. That’ll be the big thing at this point: making sure that you’re caught up on sales or at least covering your downside with some sort of marketing plan.”
The team at Allendale can be reached by calling 800-262-7538, or you can visit allendale-inc.com.