Downgrade in US Corn Export Forecast a Surprise

US corn export potential was downgraded in August, even as the Russia-Ukraine conflict dragged on, and EU crops continued to be raked by drought. 

Friday’s monthly USDA supply-demand update trimmed the 2022-23 US corn export forecast by 25 million from last month to 2.375 billion, taking it below 2021-22 exports of 2.45 billion and the 2020-21 level of 2.747 billion. In its initial new-crop supply-demand estimates back in May, the USDA pegged exports at 2.4 billion, which held steady from June and July before the reduction in August. 

Jim Mintert, an agricultural economist at Purdue University in Indiana called the decline in the export forecast a surprise, given initial expectations that the war in Ukraine would lead to a significant drop in exports from that country – sending more international business over the US instead. 

“The big surprise here is that we haven’t been able to capture a big increase in exports coming out of the situation in Ukraine,” Mintert said in a podcast last week. “Going back to April, May, I think a lot of us thought exports would be stronger than this.” 

Indeed, when Russia first invaded Ukraine back in late February, there were ideas that Ukraine’s agricultural exports could be halted entirely, while Western economic sanctions would severely limit shipments from Russia. Not only has Russia managed to find at least some buyers for its product, but Ukraine has managed to move more crop than expected via other avenues, including by truck and rail. 

Meanwhile, a new deal brokered by the United Nations is now allowing much larger volumes of Ukrainian grain to move via seaport. 

The USDA also revised its 2022-23 Ukraine corn production and export estimates higher in August, raising production by 5 million tonnes to 30 million, and exports by 3.5 million to 12.5 million. However, those two numbers remain down sharply from 42.13 million and 24.5 million in 2021-22. 

Mintert said it is also notable the US corn export forecast was lowered despite historic drought across portions of the EU, including top grain producer France. 

Friday’s USDA report slashed the EU corn production estimate by 8 million tonnes from July to 60 million, while projected EU corn imports were raised 3 million to 19 million. 

“There’s always uncertainty about the trade flows, but this has really been exacerbated by the combination of the drought in the EU and the Black Sea changes with respect to Ukraine and Russia,” Mintert said. 

Source: DePutter Publishing Ltd.

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