• The ag commentary industry likes to always be bullish, because that's what folks like to hear. 

• We can see this play out in weekly export sales and shipments numbers for grains. 

• The reality is we can see export demand, particularly for US corn and soybeans, has been decreasing since the last week of October 2024/first week of November 2024. 

There is an unwritten rule when it comes to analysis and commentary of agricultural commodities that says, “Everything is always bullish”. A few examples: Continued low cattle numbers decreasing feed demand for corn? Bullish (for corn)! The US president handing out hardship waivers to US refineries so they don’t have to use ethanol? Bullish!! USDA increasing its production guess? Bullish!!! The logic of this last one? Because everyone knows someone who knows someone who knows someone in southwest North Dakota who has a dry field, so obviously USDA is purposely overestimating national production. (I wish I was kidding.) And then there’s exports where we have the US severing ties with the world’s largest buyer of soybeans in a made-for-social media trade war. Of course that’s bullish. How? Most of US ag commentary industry will start the familiar chant, “Trade wars are good and easy to win. Trade wars are good and easy to win…”. That’s just how it is these days. As I said, everything is always bullish. 

Speaking of export demand, recently the question came up as to why I was talking about how demand for US corn and soybeans was coming down while the rest of the talking heads in ag media were rejoicing at how strong US exports continue to be. It’s a great question, one that I’ve been thinking of addressing but just hadn’t gotten around to it. Until today. 

When I analyze USDA Foreign Agriculture Service (FAS) weekly export sales and shipments data, I do so through the lens of averages and pace projections. It isn’t just comparing to last year’s numbers, though I do include this analysis, and what average pre-update guesses were. Another side note: This is the biggest farce tied to any release of government numbers: Pre-report guesses. The people making these guesses don’t know, and those who do know certainly aren’t going to say. Back in the day, the job of answering the mind-numbingly stupid calls from ag reporters asking for these guesses was given to clerks. Yet to this day you will see much ado made about how the weekly numbers lined up with pre-report guesses. 

The key difference between my analysis of weekly export sales and shipment data and the rest of the industry is philosophical. The general approach is to view each week’s numbers as something new, something completely unknown to market participants. This is based on the underlying belief that only the information driving commercial and noncommercial activity is handed to all of us by the government. In other words, in the ag sector, USDA is the Alpha and the Omega, “and nothing else matters” (as Metallica would tell us). Take a look at ag BRACE Industry members (Brokers/Reporters/Analysts/Commentators/Economists) with the largest followings on social media and you'll notice most of them act as USDA's PR department. That tells us everything we need to know. 

Naturally, I disagree with this stupidity, giving me an investment advantage. As I’ve often done, I’ll apply the late, great Charlie Munger’s quote to the situation, “It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.”  In my latest round of weekly sales and shipments analysis (see Report Commentary) of corn I wrote: 

“The latest weekly export sales and shipments update showed 2024-2025 marketing year export shipments of US corn at 1.963 bb through Thursday, May 29, a point in the marketing year when a 5-year average of 75% of what turns out to be total exports have been shipped. This pace projects total 2024-2025 exports of 2.617 bb* up 22% from 2023-2024’s reported shipments of 2.137 bb. The US reported shipped 1.554 bb during the 2022-2023 marketing year…

*The pace projection was down from the calculation of 3.02 bb the first week of November 2024. We all know what happed that week. This was a new low weekly pace projection since that week as well.”

This highlights my different view of how to use these updates. My work recognizes these numbers are outdated upon release, by one to two weeks, and are useful as a marker for where we were at that time. Recall we have real time information available to us in the form of National Cash Indexes (national average cash prices ($CNCI) ($CNSI) (CSWI) ($CRWI) ($CRSI)), national average basis, and usually futures spreads (though not this point of the marketing year).

Yes, I do use the outdated numbers to make a pace projection, though acknowledging it is an estimate based on averages. Given this, these projections are not written in stone but can change over the course of the marketing year. This change can be viewed as a trend, with the trend indicating whether demand is increasing or decreasing over time. In the case of corn, the pace projection has decreased by about 400 mb since the first week of November. In soybeans, the latest pace projection of 1.823 bb was down 210 mb from its high of 2.035 bb the last week of October. For comparison, last year the soybean pace projection decreased by about 40 mb from the last week of October through the last week of May, all of it occurring during Q3 (March-April-May). 

Which brings us to the idea of comparing only to last year, the most popular route taken by the BRACE Industry. What this group won’t address is the question of what happens the year after terrible US exports. If we look at US all wheat numbers we see total shipments for 2022-2023 (two years ago) were only 653 mb. During 2023-2024 the US reportedly shipped 681 mb, an increase of 4%. Does that mean US exports were bullish? No. The US still struggled in the global wheat market. Fast forward to the latest weekly update and we see the US shipped 768 mb during 2024-2025, through the end of May, yet marketing year-end available stocks to use were 45.8% (HRW), 41.7% (HRS) (the class of wheat with the most export shipments during 2024-2025), and 45.7% (SRW), with all three above previous 10-year averages. 

To summarize, then, like in most of my analysis I’m more interested in trends when it comes to pace projections rather than year-to-year comparisons. Sometimes those trends are not bullish. Besides, to paraphrase Syndrome, the villain from the Pixar Movie The Incredibles, “When everything is bullish…nothing will be.”