We are at a stage of the marketing year where more interest starts to be placed on unshipped U.S. export sales. While several cancellations have taken place in recent weeks, we still have old crop sales to cover. Unshipped old crop sales now stand at 349.3 mbu on corn, 108 mbu on soybeans, and 57 mbu for wheat. To start seeing some of these rolled to new crop delivery in the next several weeks would not come as a surprise.

More concern is being shown over new crop export sales as both corn and soybean bookings are at record low levels. New crop cumulative sales currently total just 108.4 mbu of corn, 93.8 mbu of soybeans, and 81.1 mbu of wheat. New crop demand is being limited by projections for larger global production figures, mainly for South America. Even if buyers do need the U.S. for coverage, it appears most are willing to wait to book it, especially with a market that has been weakening.

It is no secret the United States has suffered from poor corn demand all marketing year. Not only have export sales trailed expectations, but ethanol use is also off from initial projections. We are now starting to see soybean exports slow as Brazil continues to push out its record crop. Given the size of the soybean crop coming out of Brazil we may see this pressure right up to the next U.S. harvest and potentially beyond.

The question now is what it will take to see demand increase. The easiest way would be through crop loss in other parts of the globe, but this does not appear likely for another year. This means it will take price to bring the U.S. additional export business. What is concerning is that even with price pressure the United States has suffered from export cancellations rather than additional sales.

This is evidence of the declining market share that we have been witnessing for the past several years. Growing geopolitical differences are also limiting demand for U.S. offers, mainly with the world’s leading importer China. Several countries are also forming news bilateral trade partnerships that the U.S. is not a part of.

We are starting to see a difference in opinion when it comes to South American corn supply and demand. Argentine production is currently forecast at 37 mmt by the USDA, although several analysts feel the crop will be smaller. Some, however, feel the Argentine crop could be up to 5 mmt over the USDA projection.

At the same time the Brazil crop is being projected at a record 130 mmt mainly from a Safrinha crop estimate of 102.4 mmt. Brazilian corn yields are expected to be 11 percent above average this year. Brazil’s exports are forecast at a record 54 mmt as a result. Even so, some sources claim total South American production will be down from 4 to 6 mmt this year due to losses in Argentina and other corn producing countries.

The state of the global economy is a perpetual factor in commodity trade but is starting to be more of an issue for world trade. Several countries are seeing reduced commodity demand as consumers have started to change their buying habits.

We are now starting to see more issues with importer credit and available cash to cover purchases. One worth noting is Egypt, which recently told sellers they would be delaying payment for purchases until later in the year. This is going to be more of a problem for developing countries who do not have credit to start with. The rally we are starting to see due to global weather concerns is making the lack of buying power even more of a concern for importers.

While not an economic concern we are also seeing some import buyers show concern over tightening supplies, mainly of wheat. The potential closure of the Black Sea corridor in July is elevating these worries. The combination of these factors is driving buyers to sources with the lowest offers which heavily favors South America over the U.S. on corn and soybeans. This is also keeping buyers sourcing wheat from Russia and the EU.

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