A difference in opinion is starting to develop in the soy complex regarding export demand. The current U.S. export pace on soybeans is 8 percent under USDA yearly expectations. At the same time, outstanding soybean sales currently total 645 million bu (mbu). This is an increase from last year of 145 mbu and the third largest volume on record for this date. Chinese buying is up 83 mbu on the year, while sales to all other buyers are down 75 mbu. Thoughts China will soon back away from the U.S. is why futures have not reacted more to the record sized bookings.

Trade is more concerned on the pace of U.S. corn sales. Outstanding U.S. corn sales currently total just 527 mbu. This is a 48 percent decline on the year and 32 percent under the USDA projected pace. Heavy sales out of South America and Ukraine have pressured U.S. movement. Now that these sources are exhausting their corn reserves, we will likely see demand for U.S. offers increase.

The question for corn is how much demand we will see and when. The longer it takes for corn demand to build the less of a chance of meeting yearly USDA projected sales. Given the 32 percent deficit to projections we will first need to see this erased and then additional demand for sales to become bullish. While this is possible, it seems unlikely at this time. This is the primary reason corn futures have not reacted to recent flash sales.

The main difference between this year and those in recent history for export sales has been the loss of Chinese demand. China is still the leading importer of U.S. commodities, but the volume has receded from just a few years ago. A primary reason for this has been the outbreak of COVID and China’s policies that greatly restricted the country’s demand. China has relaxed these regulations, but demand has been slower to build than hoped for. We may not see Chinese demand build until later in 2023. This is more of a concern on corn demand as exporters had been hoping for elevated sales prior to the start of the Brazilian export program.

Global commodity trade continues to shift with more and more business being directed to South America, mainly Brazil. During the 2022 calendar year Brazil exported 43.5 million metric tons (mmt) of corn, well above the 20.6 mmt that was exported in 2021. Brazil’s soybean exports for 2022 totaled 78 mmt which was a decrease of 10 percent from 2021. The lower soybean exports were a result of the late-season drought that cut the country’s production. Record production is predicted for this year on both crops in Brazil, and exports are forecast to increase substantially, especially on soybeans. Brazilian officials are predicting 98 mmt of soybean exports this year which will reduce the U.S. market share.

While the loss of this business seems negative, it is not as bad as it appears. The stocks to use ratio on corn is still just 9 percent and soybeans is at 5 percent. These are both levels that would warrant price rationing to continue. Until we see a build in reserves this will keep a floor under commodity values.

Not only is trade monitoring forward contracting of corn and soybeans, but of beef and pork as well. The United States has beef sales of 51,000 metric tons on the books for 2023. While sizable, this is a decrease of 18 percent on the year. Pork sales currently total 16,000 metric tons for 2023 and is an increase of 23 percent on the year. China is not booking U.S. beef, which is why we are seeing those numbers down from a year ago. Mexico continues to buy large volume of U.S. pork, giving us the higher volume.

Much of the focus in the livestock market has been on exports, but we are now seeing more interest on meat imports, mainly on beef. U.S. beef imports between January and October of this year have totaled 2.9 billion pounds, an increase of 4.5 percent on the year. The USDA is currently projecting yearly beef imports of 3.35 billion pounds. The most imports are coming from Canada with 804 million pounds, followed by Mexico at 627 million pounds. Trade is closely watching Brazilian beef imports which have jumped to third highest at 436 million pounds. This is a year-to-year increase of 57 percent as safety concerns on Brazilian beef imports have eased.

Ukrainian officials have revised the country’s corn production number, putting the crop between 22 and 23 mmt. This is 4 mmt under what the USDA is using in world balance sheets. It is well below the 41.9 mmt Ukraine grew in 2021. Ukraine has 30 percent of its crop still in the field and thoughts are some of this will be lost before harvested next spring. The 2023 corn crop may be even smaller as more producers opt to plant sunflowers for both crop rotations and a need to replenish domestic vegetable oil reserves.

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