Crops > Outlook & Prices > Outlook & Prices
June 2023
Poorer crop conditions and weaker export sales
With planting nearly complete, traders are focused on the weekly crop development and conditions for supply news and the weekly export sales reports for demand news. USDA’s Crop Progress reports summarize observer ratings on the condition of the crops. The condition reports for both corn and soybeans have begun with the emergence of the crops. Every Monday morning, roughly 3,600 cropping experts across the nation rate the crops in their region on a "very poor" to "excellent" scale. The early ratings show that while planting occurred at a faster than average pace, the condition of the crops is rated below last year. Based on the data from the June 12, 2023 report, 61% of the nation’s corn crop was rated "good" to "excellent", which was three points lower than the rating at the same date for the 2022 crop. For soybeans, the "good" to "excellent" rating stood at 59%, 3 points lower than 2022. In general across the nation, the crop ratings have been reduced due to drier conditions across the majority of the country, from the Rocky Mountains to the eastern coasts. This year’s crop ratings are also running below the five-year average ratings, which signals the potential for below trendline yields if conditions do not improve.
While the data is limited on the supply side, the weekly export sales reports provide more information on the early signals for international sales and shipments. For example, the export reports are currently tracking sales agreements for the 2022, 2023, and 2024 corn and soybean crops. Figures 1 and 3 show the changes in soybean and corn export sales between the 2021 and 2022 crop years. The bars in the figures highlight the bushel change in sales, along with the percentage change for each country or region listed. These figures show the current pattern in exports from last year’s crops. Figures 2 and 4 display the advance export sales patterns for soybeans and corn over the past few years. The graphs contain the data for the 2021 and 2022 crops, along with the sales thus far for the 2023 crop and the five-year average (2018-2022) pattern for export sales. The lines for each year basically start at the beginning of the calendar year the crop was planted and harvested, so the sales represented are being made either before the crop is planted or during the growing season. These figures signal the expected demand for this year’s crops from the international markets.
As Figure 1 shows, the US soybean market has seen a marked slowdown in international purchases. Overall, soybean export sales are down nearly 15% from last year at this time, roughly 320 million bushels. While our top soybean buyer, China, has bought a few soybeans this year, the vast majority of countries have pulled back on soybean purchases from the United States. The largest losses are coming from Middle Eastern and African markets and from sales to unknown destinations. The drop in sales to unknown destinations is likely a signal that even the Chinese demand for US soybeans is lower, despite the higher direct sales, as a majority of sales to unknown destinations are revealed as sales to China. The combination of high US soybean prices and increased production from Brazil has taken its toll on the US soybean industry.
As Figure 2 shows, despite the decline in soybean prices this spring and early summer, advance soybean export sales are still trailing well behind usual. Advance sales for the 2021 and 2022 crops were at or above the five-year average for most of the pre-plant and growing season. The current state of advance sales for the 2023 soybean crop has not kept up with the previous two years, nor the five-year average. Currently, slightly over 100 million bushels of soybeans are already spoken for as exports out of the 2023 crop. Usually, we have twice as many bushels sold by this time of year. As the figure shows, the pace of advance soybean export sales tends to increase over the coming months. For those looking for factors to support prices going into harvest, we will need to see stronger than usual export sales over the next few months.
The export troubles in soybeans pale in comparison to those for corn. Current corn export sales are down by over 800 million bushels in total (over 36%). The decline is widespread, as sales are lower in all of the major markets and in the rest of the world aggregate (labeled "Other"). Similar to soybeans, export sales have been hurt by high US prices and increased production from Brazil. Corn has also been impacted by larger global production in other feed grains and shifting of international feed grain purchases from US corn to other feed grains.
The advance sales data for the 2023 corn crop shows the export issues are also impacting the outlook for this year’s crop. Over the past couple of years, China has been a major corn destination. For the 2021 corn crop, China led a flurry of advance corn purchases in May, adding 500 million bushels to the export sales total. For the 2022 crop, China’s initial purchases were smaller, but still put US advance sales ahead of the five-year average. Now, the sales pace is well below last year’s pace and the five-year average. Last year at this time, China was the top purchaser in those advance sales with roughly half of the total. This year, China is second, behind Mexico.
With the June WASDE report, USDA continued a pattern of lowering the export targets for the 2022 corn and soybean crops, taking 50 million bushels out of corn and 15 million bushels out of soybeans. They held the projections for the 2023 crops steady. Those show corn exports rebounding to reach 2.1 billion bushels, while soybean exports continue to retreat. However, the pace of advance sales suggests that the 2023 export projections will likely be reduced, unless the lower crop prices can reignite US sales into a number of markets across the globe
Listen to the latest Market Outlook video for further insight on outlook for this month.
Chad E. Hart, extension economist, 515-294-9911, chart@iastate.edu
