USDA rundown: Record US corn exports and US biofuel boom

Reuters

9 hours ago

NAPERVILLE, Illinois, July 13 (Reuters) - The United States, the world's top corn supplier, is set to export a record volume of corn in the waning 2024-25 marketing year, slightly edging out 2020-21's high.
The catch? This year's efforts included virtually zero involvement from China, whereas 31% of U.S. exports went to China in 2020-21, which was easily a record share.
China had struck up a trade relationship with No. 2 corn exporter Brazil a couple of years ago. But those purchases have dried up, too, reflecting China's sharp drop-off as a global grain importer.
The U.S. Department of Agriculture in its monthly supply and demand report on Friday reduced its estimate for 2024-25 Chinese corn imports to 5 million metric tons from 7 million a month prior. That is a staggering 79% lower than in the previous year.
China's absence has not stopped U.S. corn exporters from a blockbuster season in 2024-25, which ends on August 31. USDA on Friday increased its 2024-25 U.S. corn export estimate to 2.75 billion bushels, up from 2.65 billion last month.
Recent sales data suggests the new target is fair, if not slightly conservative. U.S. exporters through July 3 had sold 99% of the 2.75 billion bushels, the largest coverage by the date in 12 years.
Any further success for U.S. corn exports could be challenged by Brazil. USDA increased Brazil's 2024-25 corn crop to 132 million tons from 130 million last month. That matches Conab's Thursday number, the first agreement among the agencies on Brazil's corn crop in four years.
It would also be 11% more corn than Brazil produced a year ago, per USDA figures.
USDA on Friday made some major changes to its U.S. soybean oil demand assumptions for 2025-26, which starts October 1. The agency cited recent blending mandates as well as tax credits and curbs on foreign feedstock imports.
U.S. soybean oil use for biofuels is predicted to reach a record 15.5 billion pounds in 2025-26, up 23% on the three-year average and up 12% from USDA's June estimate. The agency slashed 2025-26 exports to accommodate the boost in domestic demand.
The new figures show biofuels in the upcoming year accounting for more than half of all U.S. soybean oil use for the first time in history, near 53% worth.
As such, U.S. soybean processing in 2025-26 is set for a new record of 2.54 billion bushels. That would represent 58% of total domestic disappearance, the largest share in 18 years, further displacing exports.
USDA bumped up 2024-25 U.S. soybean exports on Friday, but it cut 2025-26 exports by 4%. New-crop soybean exports are now estimated at 1.745 billion bushels, USDA's lowest July print in 11 years.
New-crop sales covered just 3.9% of that new target as of July 3, the date's second-worst in 25 years and only slightly better than a year ago. China has yet to make any 2025-26 bookings, its latest start in the U.S. soybean market since 2005.
The soybean market sluggishness has caught the attention of speculators, who in the week ended July 8 established their first net short in CBOT soybean futures and options in three months. The net short is slight, just 6,216 contracts.
Money managers trimmed their net short in CBOT corn futures and options, which remained around 200,000 contracts as of July 8. That marked only their fourth week as net buyers within the last 20.
Funds' moves in the week ended July 8 were very mild all across U.S. grains and oilseeds. But it is noteworthy that they have whittled their net short in CBOT wheat to an eight-month low of 55,594 futures and options contracts, half what it was two months ago.
Speculators still remain heavily bearish as a whole across grains and oilseeds, but much less so than a year ago.
They have also held those bets relatively steady over the last few weeks, a very, very small potential shred of hope for bulls given that the market may already be factoring in a gigantic U.S. corn yield.
Karen Braun is a market analyst for Reuters. Views expressed above are her own.
Enjoying this column? Check out Reuters Open Interest (ROI), opens new tab, your essential new source for global financial commentary. ROI delivers thought-provoking, data-driven analysis of everything from swap rates to soybeans. Markets are moving faster than ever. ROI, opens new tab can help you keep up. Follow ROI on LinkedIn, opens new tab and X., opens new tab