USDA report: record US corn exports, biofuel boom in the US: Braun

The United States is the top corn exporter in the world and will set a new record for corn exports during the final marketing year of 2024-25, just barely beating the previous high from 2020-21.

What's the catch? The catch?

China established a trading relationship with Brazil, the world's No. Brazil was the No. 2 corn exporter in China a few years back. These purchases, however, have also dried up due to China's dramatic drop in grain imports.

In its monthly report on supply and demand, the U.S. Department of Agriculture reduced its estimate of 2024-25 Chinese imports from 7 million to 5 million tons. This is 79% less than the previous year. The absence of China has not prevented U.S. corn producers from having a record-breaking season in 2024-25. This season ends on August 31, 2019. USDA increased its estimate of U.S. corn imports for 2024-25 to 2,75 billion bushels on Friday, up from 2,65 billion bushels last month.

Recent sales figures suggest that the new target may be fair, even if it is slightly conservative. Through July 3, U.S. Exporters had sold 99% (2.75 billion bushels), the highest coverage to date in the past 12 years. Brazil could challenge any further success of U.S. Corn exports. USDA has increased Brazil's corn crop for 2024-25 to 132 millions tons, up from 130 million last week. This number matches Conab’s Thursday figure, and is the first agreement between the agencies in four years on Brazil’s corn crop.

USDA figures show that Brazil produced 11% more corn a year earlier.

OILSEEDS & BIOFUELS USDA made major changes on Friday to its U.S. Soybean Oil Demand Assumptions for 2025-2026. This starts on October 1. The agency cited recent blending requirements, tax credits, and restrictions on foreign feedstock imports.

The USDA estimates that the U.S. will use a record amount of soybean oil for biofuels in 2025-2026. This is up by 12% compared to USDA's estimate from June. The agency cut 2025-26 imports to meet the increased domestic demand.

Biofuels will account for nearly 53% of the total soybean oil used in the United States in the coming year, a record high.

In 2025-26, the U.S. soybean industry will process 2,54 billion bushels. This is a record. This would be 58% of the total domestic disappearance. It is the highest share in 18-years, and further displace exports.

USDA increased U.S. exports of soybeans for 2024-25 on Friday but cut exports for 2025-26 by 4%. USDA estimates that new-crop soybeans exports now total 1.745 billion bushels. This is the USDA's lowest estimate for July in 11 years.

As of July 3, new-crop sales were only 3.9% of the target, which was the second-worst date in 25 years. It was also slightly better than last year. China has not yet made any bookings for 2025-26, its last start on the U.S. soya market since 2005.

FUND REMAIN BEARISH

Speculators have been captivated by the slowdown in the soybean market. They established their first net-short in CBOT futures and options for soybeans in the last three months. Net short is only 6,216 contracts. Money managers reduced their net short of CBOT corn options and futures, which was around 200,000 contracts on July 8th. This was only the fourth time in 20 weeks that money managers were net buyers.

The fund's movements in the U.S. oilseeds and grains during the week ending July 8 were very modest. It is notable that their net short position in CBOT Wheat has been reduced to a low of just 55,594 contracts for futures and options, which is half the amount it was two month ago.

The speculators are still heavily bearish on grains and oilseeds as a group, but this is much less than it was a year earlier.

The bulls have also kept their bets fairly steady in the last few weeks. This is a tiny bit of hope, given that the market has already factored in the massive U.S. yield.

Karen Braun is an analyst at. The views expressed are Karen Braun's.

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(source: Reuters)