US PNW corn throws lifeline to export outlooks as Asia stocks up

3 Mar 2023 | Mark Shenk

US corn exports could rebound in the weeks ahead as a combination of drought in Argentina, delays in the Black Sea and the late-running Brazilian crop appear to have opened an export window for the country - with the renewed competitiveness spearheaded by the Pacific Northwest.

The dynamic could reverse a pattern of slow exports and a lag to last year's pace that has raised fears that the US might not be able to meet the USDA's 2022/23 marketing year export forecast of 48.9 million mt.  

“PNW is the low-cost supplier to Asia right now and some $4-5 per mt below South America,” Larry Shonkwiler at Advance Trading told Agricensus.

“With Brazil somewhat out of the market until mid-July and a smaller Argentine crop and/or perhaps tighter producer holding there, the U.S. should be the beneficiary through June,” he continued.

Corn FOB PNW values combined with freight to Northeast Asia weighed in at about $326.25 mt on Thursday, lower than Up River Argentina corn cargoes on a handysized basis.

When combined with shipping costs to the same destination, Argentina came in at $336/mt, with Brazil similarly out of the picture at $331.25/mt.

“It does seem like we've had a few bargain hunters show up and at least give us a hint of demand, especially off the PNW of late,” Kelly Herrick of Advance Trading said in an interview with Agricensus.   

Cargoes from the US Gulf are also looking competitive, with corn FOB US Gulf at a $7/mt discount to Argentina's Up River on Thursday, the biggest since January 2021.   

“Economics should work for China to import US corn, with the hurdle being the import margin is better to import Brazilian corn this summer. So, how complacent can the buyer be waiting to confirm a crop out of Brazil? The slightly later planting progress in some regions of Brazil needs to be monitored as we've seen how quickly that crop deteriorates when it stretches into the dry season,” Herrick explained.

"We have a narrow window where interest should improve for US corn exports. Argentine corn continues to be in retreat and corn out of Brazil will not be available until early April," Brian Hoops, president at Midwest Market Solutions, told Agricensus.

Accumulated corn exports during the 2022/23 marketing year totaled 15.03 million mt as of February 23, down by 42% from 25.77 million mt at the same point of last year, data from the US Department of Agriculture (USDA) showed Thursday.

However, even with an increase in shipments to Asia, market participants believe the USDA will have to reduce projections that the country will export 48.9 million mt during the marketing year.    

"There is some catching up to do, and with less than 600,000 tons reported sold last week, the trade is rethinking USDA’s corn export estimate for the current crop year," senior grain and oilseed commodity analyst at Futures International Terry Reilly told Agricensus. 

Currently, USDA net sales data shows US corn exports at 15 million mt, as of the week ending February 23 - some five and a half months into the new marketing year.

With the outstanding balance of net sales that remain to be shipped standing at 14.2 million mt, the combination is well short of the current forecast.

Moreover, the US needs to export an average of 1.2 million mt every week over the 28 weeks of the marketing year that remain. 

"With China coming out of its COVID restrictions, we have heard of rumors that China is buying US corn and sorghum out of the PNW. I don’t think we will see a large upswing in corn exports, but an improvement is likely," Hoops said.