Key U.S. corn customers unusually absent as export sales lack -Braun

NAPERVILLE, Ill., Dec 1 (Reuters) - Grain traders are well aware that the world’s top corn supplier, the United States, has recently struggled selling the product to international consumers, dampening hopes of maintaining a somewhat robust export program despite high prices.

Lead buyer Mexico is the only one living up to purchase expectations, but sales to other top destinations that bolstered the U.S. corn market last year are alarmingly low. Increased competition from Brazil following its big mid-year harvest can partially explain this trend.

The U.S. Department of Agriculture forecasts domestic corn exports for the 2022-23 season started Sept. 1 at 54.6 million tonnes, down 13% from last year and just a hair under average for the last nine seasons.

But U.S. corn export sales as of Nov. 24 were down 48% from the previous year, and it gets worse when isolating some of the most critical customers. Current sales to what were U.S. corn’s No. 2 through No. 5 destinations last year are down 71% on the year.

Those four countries, including China, Japan, Canada and Colombia, accounted for 56% of U.S. corn exports in 2021-22.

USDA does not disclose its country-level assumptions when it comes to its export forecasts. But it is highly likely with the exception of Canada that the agency expects the top U.S. buyers, particularly China, to show up in the U.S. market to a much larger degree than they have been lately.

Mexico is the bright spot for now, having secured 9.1 million tonnes of U.S. corn so far in 2022-23. That is down 11% from a year ago, but it is second best to last year’s unusually strong early booking pace. Rising Mexican demand should continue supporting its U.S. corn interest in the near term.

CHINA AND JAPAN

China’s fluctuating demand for U.S. products used to be a problem contained in the soybean market, but ever since the Asian country re-entered the corn space in mid-2020, the U.S. corn industry has been counting on that business. And lately, it has been disappointed.

As of Nov. 24, China has booked 3.5 million tonnes of U.S. corn for 2022-23 shipment, down 71% from the same date last year.

China accounted for 31% of U.S. corn exports in 2020-21 and 23% the next year. China currently accounts for 19% of 2022-23 U.S. corn sales, somewhat consistent with the predicted contraction in imports.

But most of those sales occurred between March and May, and recent activity has been light or non-existent, the predominant concern. Adding to that uncertainty is Brazil’s new ability to ship corn to China, which it started doing last month, though to a very light degree.

Brazil’s corn shipments usually die down by February or March, when U.S. ones start to take off. But the South American exporter grew a record large crop this year, and that has redirected some business from a longtime U.S. buyer, Japan.

Japan has accounted for around 20% of annual U.S. corn exports in recent years, and that volume has not fallen below 10 million tonnes since 2012-13. By Nov. 24, Japan had purchased nearly 1.5 million tonnes of U.S. corn for 2022-23, down 52% on the year and the smallest for the date in over 20 years.

From July through October, Brazil’s corn exports to Japan were double the year-ago period and second highest after 2019. Japan has also been able to switch out some corn in animal feed rations for competitively priced rice, a crop with strong government support.

CANADA AND COLOMBIA

One of the United States’ top corn customers will not return in the same way as last year. Canada accounted for 10% of U.S. corn exports in 2021-22 to fill a gap in feed grains after its own crops, particularly wheat and barley, were decimated in the 2021 drought.

A record 6 million tonnes of U.S. corn were shipped to Canada in 2021-22, more than three times the recent annual average and far outpacing the prior high of 3.9 million tonnes set in 2002-03. Canada’s crops in 2022 bounced back to normal and its U.S. corn bookings are down 87%.

Colombia, the No. 5 U.S. corn destination last year, has purchased just over 300,000 tonnes for shipment in 2022-23, a ten-year low and down 84% from a year ago. The United States is still easily Colombia’s top corn supplier, but cheaper corn and shipping rates from Brazil and Argentina have whittled the U.S. share.

The only somewhat notable buyers of U.S. corn with more on the books this year versus the same date last year include Honduras, up 3% at 433,000 tonnes. The European Union is set to receive 105,000 tonnes of U.S. corn versus none a year ago after its 2022 crop fell to drought. Karen Braun is a market analyst for Reuters. Views expressed above are her own.

(Editing by Chris Reese)