October 2016 – Trade Update
Current market year-to-date corn, soybean and wheat inspected for export continue to outpace the previous market year to date, but divergence across commodities in weekly inspections compared to the same week last year is starting to appear.
On corn, this week’s export inspections, at 1.47 million MT are nearly 1 million MT greater than the same time last year. This difference is equivalent to an additional 38 million bushels being inspected for export during the week of 9/29/16 compared to same week last year. This is consistent with previous weeks this marketing year—there hasn’t been a week yet where the gap has been any less than 20 million bushels. Year-to-date corn inspections are up 77 percent, compared to the previous marketing year.
There has been a lot of discussion this week about China’s announcement that the country will allow corn exports for the first time in a decade and how that might affect the strength of U.S. corn exports over the next weeks. Certainly we know that China has large domestic corn stocks on its hands, in large part due to subsidy programs that encouraged production (and a lawsuit brought by the U.S at the WTO). We also know that much of China’s stocks have been sitting a very long time in less than ideal conditions. What we don’t know with any precision, and anyone who claims otherwise is overestimating their market intelligence, is how big those big stocks are and their condition. Folks on the ground claim to have seen a lot of moldy corn that isn’t suitable for export. So, how big an impact potential Chinese corn exports will have on the market remains to be seen, but put me in the minimal camp.
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