June 2024

Factors pointing in different directions

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 the condition of the crops. The condition reports for both corn and soybeans have begun within the past couple of weeks. 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 was delayed in comparison to last year, the condition of the crops is rated well above last year as the widespread rains have dramatically eased drought concerns in the short term. Based on the data from the June 10 report, 74% of the nation’s corn crop was rated "good" to "excellent", which is 13 points higher than the rating at the same time for the 2023 crop. For soybeans, the "good" to "excellent" national rating stood at 72%, 13 points higher than 2023. The somewhat slower planting pace and the need to replant some fields due to ponding issues could indicate lower yield potential this year. However, the current crop conditions are above the five-year averages for this time of year, pointing to the potential for better yields.

While we are just at the start of the data gathering window for the supply side, the weekly export sales reports provide more detailed information on the early signals for crop usage via exports. For example, the export reports are currently tracking sales agreements for the 2023, 2024, and 2025 corn and soybean crops. Figures 1 and 3 show the changes in corn and soybean export sales between the 2022 and 2023 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 couple of years. The graphs contain the data for the 2022 and 2023 crops, along with the sales thus far for the 2024 crop and the five-year average (2019-2023) 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 continues to see a retreat in international purchases. Overall, soybean export sales are down over 15% from last year at this time, roughly 280 million bushels. That is eerily reminiscent of what we saw at this time last year, where export sales were down 15% year-over-year. While China remains our top soybean buyer, they have continued to purchase more soybeans from other countries and less soybeans from us. Soybean export sales in other countries are mixed, with Mexico and Indonesia increasing purchases and the European Union, Japan, and Egypt reducing purchases. We are also seeing reductions in sales to unknown destinations and sales into smaller markets. The drop in sales to unknown destinations is tied to the drop in Chinese sales as a majority of sales to unknown destinations are revealed to sales to China. The growth in soybean production in Brazil has increased competition in global markets and continues to take its toll on the US soybean industry.

As Figure 2 shows, despite the decline in soybean prices over the past couple of years, advance soybean export sales are still trailing well behind usual. Advance sales for the 2022 crop were well above the five-year average for most of the pre-plant and growing season. Those advance sales didn’t materialize for the 2023 crop. And the current state of advance sales for the 2024 soybean crop is well below the five-year average and even below last year’s pace. Currently, less than 50 million bushels of soybeans are already booked for export from the 2024 crop. Usually, we have four times 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, but we have a long way to go to catch up to even average. USDA’s current outlook does hold out some hope for improvement, as they project 1.825 billion bushels of soybeans exported from the 2024 crop. That would be a 125 million bushel increase from the 2023 projected total.

Figure 1. US soybean export sale shifts and Figure 2 US soybean advance export sales.

While soybean exports continue to struggle, corn exports have rebounded over the past year. Current corn export sales are up roughly 500 million bushels in total (over 33%). The only big weak spot has been China, as sales there are off by nearly 200 million bushels. But gains across the vast majority of other corn export markets have more than offset the Chinese retreat. Mexico alone has increased corn purchases by roughly 250 million bushels. Corn sales are up in Japan, Colombia, South Korea, Taiwan, unknown destinations, and in smaller markets. The pace of export sales has not been fast enough to prevent higher ending stocks and lower prices, but it has reduced the speed at which they were happening.

The advance sales data for the 2024 corn crop are following closely to the pattern we saw last year. The 5-year average line is heavily influenced by the 2021 crop year, when China made a number of large advance corn purchases, adding 500 million bushels to the export sales total. This year, China is nowhere to be found in terms of advance sales. Mexico and Japan have been the early buyers thus far.

Figure 3 US corn export sale shifts and Figure 2 US corn advance export sales.

The June WASDE report didn’t change the outlook much. In fact, the only shift was a 10 million bushel drop in soybean crush for the 2023 crop. Earlier in the year, USDA indicated greater corn and soybean exports for the 2024 crops and they have held to those projections. The targets are 2.2 billion bushels for corn and 1.825 billion bushels for soybeans. The pace of sales so far is not encouraging, but there is still plenty of time. Export sales naturally pick up as we approach harvest. Given the relative lack of news in the June WASDE, corn and soybean prices barely moved after the report. USDA’s current 2024-25 season-average price estimates are $4.40 per bushel for corn and $11.20 per bushels for soybeans. Futures prices align with USDA’s forecast for soybeans, but are offering some optimism for corn, as corn futures point to an average price in the $4.65 range. But that optimism is likely based expectations of a slightly smaller corn crop than USDA’s current estimate. And comparing these price estimates to production costs, the markets are roughly pricing at breakeven.

Listen to the June 2024 Crop Market Outlook video for further insight on outlook for this month.

 

Chad E. Hart, extension economist, 515-294-9911, chart@iastate.edu

Author

Chad E. Hart

extension economist
Iowa State University
468E Heady Hall
515-294-9911
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