US grain exports are set to hit multiyear low in the current season, marked by wheat shipments that are expected to reach the lowest in over 50 years and corn exports heading to a three-year low, allowing US competitors to grab a larger market share in global grain supply chain.
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Register NowUS wheat exports are likely to decline to the lowest point inover five-decade as shipments dip in the marketing year 2022-23 (June-May).
According to the latest World Agricultural Supply and Demand Estimate report in January, US' wheat exports in MY 2022-23 are seen at 21.1 million mt, the lowest since MY 1971-72 when exports were at 16.3 million mt.
As of Jan. 26, the US has exported 16.2 million mt, down over 6% year on year, the USDA data showed. The US is projected as the fourth-largest exporter in MY 2022-23, with a lower than average share of global shipments at 10%.
"The exports are likely to be lower in 2022-23 as demand has declined amid continued cheaper prices from competitors," a trader based in Kansas said.
US wheat exports are seen taking a dip as cheaper wheat supply from key competitors and major exporters like Russia, Canada and Australia are commanding larger market share, market participants said.
Wheat supplies in the US have shrunk after two smaller harvests. According to the USDA, in MY 2022-23 the US is expected to harvest 44.9 million mt compared with 44.8 million mt in MY 2021-22. Widespread drought still threatens much of the US Plains and crop health is poor, which may lead to yield risks. However, crop conditions have improved over the past few weeks.
As of Jan. 24, around 59% of US winter wheat area was experiencing drought, compared with 67% a month ago, data from the US Drought Monitor showed. The drought conditions have eased from the November peak of 75%.
Nebraska, California, Kansas and Colorado are facing extreme to severe drought conditions, the drought monitor data showed. During February, severe drought conditions are likely to persist across Nebraska, California and Kansas while Colorado may see slight improvement, the Weekly Weather and Crop Bulletin said on Jan. 31.
Showers are expected in some parts of the southern Plains including southwestern Kansas and the Oklahoma and Texas panhandles where hard-red winter wheat is overwintering, according to forecasts from the National Weather Service.
Mixed precipitation is also likely in much of northern Kansas and into southern Nebraska. The southern Plains, a key region for winter wheat, have been extremely dry this growing season.
Could corn exports make a recovery?
US corn sales and exports so far in the MY 2022-23 are still less than 50% of the USDA's very low 1.925 billion bushels in the January WASDE and also behind last year's mid-January pace when full year exports totaled 2.47 billion bushels, S&P Global analysts said in a recent report.
The USDA cut its estimate for US corn exports for the MY 2022-23 crop by 150 million bushels from its previous estimate to 1.925 billion bushels -- the lowest after MY 2019-20 -- citing competition from other exporters, as US corn prices at present are uncompetitive compared with its rival countries, Brazil and Argentina. Since the beginning of MY 2022-23, US corn exports have been cut by 475 million bushels.
Continued dryness in parts of the US has resulted in logistical troubles for US corn, leading to higher freight rates, uncompetitive prices and diminishing export demand.
Low water levels in the Lower Mississippi River affected the potential of US corn export due to the record high barge freight cost amid barge transit restrictions. Restrictions were for less cargo per barge and less barges per tow, meaning with lower water levels, vessel operators and shippers have had to use lighter loads because of draft restrictions.
The absence of demand for US corn from China is also a key driver for the slower US corn export pace in 2023. After emerging as a top buyer of US corn in the last 2-3 years, China's corn demand since 2022 has been muted.
There are chances that demand for US corn can gather pace in the coming months after supplies from South America ease after the first half of this year and a window opens for US corn to supply to the world markets, according to market sources.
Brazil is estimated to have produced a record amount of corn in MY 2021-22 (February-January) at 125.06 million mt, according to the country's national agricultural agency Conab, and demand for Brazilian corn has been high. The MY 2021-22 corn crop in Brazil will be marketed in 2022-23.
As stocks in Brazil recede, and dryness in Argentina could possibly limit corn supplies from the country, demand for US corn could return.