U.S. Department of Agriculture lowers export estimates for corn, wheat

The U.S. Department of Agriculture (USDA) lowered its export projections for corn and wheat in the 2018-2019 harvest season amid slumping grain volumes and Midwest rail operations coping from last month’s record flooding.

In USDA’s World Agricultural Supply and Demand Estimates report that it updates monthly, USDA estimated that U.S. corn exports will total 945 million bushels in 2018-2019, compared with its March estimate of 965 million bushels. These estimates are higher than the 901 million bushels exported in 2017-2018 but lower than the nearly 1.1 billion bushels exported in 2016-2017. The marketing year runs from September 1 through August 31 for corn and soybeans and from June 1 to May 31 for wheat.

U.S. corn exports are projected to total 2.3 billion bushels, down from estimates in March of nearly 2.38 billion bushels. The most recent estimate is down from the 2.4 billion bushels exported in 2017-2018 but in line with the roughly 2.3 billion bushels exported in 2016-2017.

USDA kept its estimate for U.S. soybean exports unchanged, at 1.88 billion bushels. This estimate is down from 2.13 billion bushels and 2.17 billion bushels exported in 2017-2018 and 2016-2017, respectively.

The lowered export estimates come as U.S. railroads have hauled less grain so far this year compared with the same period in 2018. For the first 14 weeks of 2019, U.S. grain volumes totaled 299,328 carloads, down 5.2 percent from the same timeframe a year ago, according to the Association of American Railroads.

The reduced grain volumes partly reflect the service disruptions and embargoes that occurred in the Midwest because of last month’s record flooding. While service continues to improve, a few lines are still grappling with issues. Both BNSF (NYSE: BRK) and Norfolk Southern (NYSE: NSC) are experiencing service issues near Hannibal, Missouri because of flooding on the Mississippi River, while Union Pacific (NYSE: UNP) is watching water levels and flooding conditions near St. Paul, Minnesota. UNP also expects repairs to continue on two subdivisions through late April and May.