For more than 50 years, U.S. farmers have dominated the international corn market, exporting more corn than any other country, UkrAgroConsult reports, citing Bloomberg.
In the 2022/23 agricultural year, which ended on August 31st, the USA gave up the lead in corn exports to Brazil and will probably never regain it again.
According to the USDA, the USA in the 2023/24 season will account for around 23% of global corn exports, significantly less than Brazil (around 32%). Brazil is also expected to take the lead in acreage for the 2023/24 season, which begins on September 1st. America has only left the top spot once: in 2013 after a devastating drought.
The loss of leadership in corn exports may sound familiar to American farmers, as they have also lost the top spot in soybean and wheat exports over the past decade. Soybeans were the first to lose, with Brazil eventually taking the lead in 2013. In 2014 they lost USA also their dominance in wheat exports, as the EU and later Russia began to displace US farmers in the global market.
Several factors are responsible for this shift: rising costs in the USA and a lack of available acreage, the ongoing impact of former President Donald Trump's "trade war" with China and the strong U.S. dollar. Today, around 1/3 of global soy exports are accounted for USA, which is second only to Brazil. With wheat they are USA now in fifth place.
The constant decline and loss of competitiveness USA is a blow to a country that has long used food as a geopolitical force. At the height of the Cold War, the... USA used their considerable reserves to prevent the spread of communism in the developing world and, after crop failures in the early 1970s, shipped about a quarter of their wheat to Russia.
Admittedly, the change in corn exports isn't all that unexpected: For years, the federal government has promoted the use of domestically grown corn to produce ethanol, which is added to gasoline. About 40% of U.S. corn goes to domestic plants that produce ethanol for use as fuel, although that demand is at risk as electric cars become more widespread. If the plants are not purchased, the corn crop may be lost USA also stored in large silos or granaries to be used for many years and wait for better prices.
Krista Swanson, an Illinois farmer and senior economist for the National Corn Growers Association, said the huge Brazilian corn crop and the shortage in the USA combined with a weak Brazilian currency have given Brazilian corn exports an advantage in the 2022/23 season. She hopes this is only temporary. “This year we faced some challenges in the global market,” she said. “It's hard to compete when in May and June the market price in Brazil was 75 cents per bushel lower than in the United States.”
However, some of the challenges of a globally competitive U.S. corn industry will persist beyond the 2022/23 marketing year. In the USA Labor and transportation costs are higher, especially because the ongoing Mississippi drought is preventing corn exports from the Midwest. Brazil has modernized its ports and infrastructure, closing previous logistical gaps. Due to the warmer climate, Brazil also has two corn harvests per year instead of just one, giving it a competitive advantage over the USA represents. Even if the U.S. corn sector regains its export leadership within a year or two, it is unlikely to regain it in the long term given the obstacles in the global market compared to Brazil.
At their peak, they exported USA 78% of annual wheat, 54% of soybean and 45% of corn production; In 2024, these numbers are expected to fall to 40%, 43% and 14%, respectively. Also the proportion of USA of total global grain exports is lower.
In 2022, China signed an agreement to purchase Brazilian grain to reduce its dependence on the United States and replace supplies from Ukraine disrupted by the Russian invasion. The first corn shipment from Brazil under the new agreement began in November 2022.
Of course, China remains a major buyer of U.S. grains, importing more corn and soybeans than any other buyer, at least over the past two calendar years. But now millions of tons of Brazilian agricultural products also flow to China every year. In July 2023, China was the leading destination for corn shipments from Brazil, with 902.000 tons, compared to zero tons at the same point in 2022.
Brazil “is not a close ally of the USA, so Beijing is confident it can continue trade with Brazil even if relations with the USA should suddenly worsen,” reports Trivium China. Brazil also demands more of what China has to offer, e.g. B. Investments in infrastructure and technology, which would further strengthen the burgeoning relationship. “It is unlikely that diplomatic relations between the USA and China will improve significantly in the foreseeable future, which, like it or not, will be detrimental to US agriculture.
Source: Ukragroconsult (Ukraine)