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OVERVIEW

For 2017/18, global corn production is down slightly as smaller crops in Canada and the EU more than offset higher prospects in Russia. Global trade is raised on higher projected imports for the EU and Iran. Exports are boosted for Brazil and Ukraine. Barley trade is little changed as a smaller barley crop in the EU reduces exportable supplies, while a larger crop in Ukraine boosts barley export prospects. The U.S. season-average farm price is unchanged at $3.30 per bushel.

For 2016/17, global corn production is up from last month driven by a larger crop in Brazil. Global trade is slightly higher as greater exports for Ukraine more than offset lower shipments from Brazil. The U.S. season-average farm price is unchanged at $3.35 per bushel.

PRICES

Global corn prices have trended down from last month’s WASDE on improved prospects for abundant global supplies, as well as weather eroding premiums during July. Although Argentine bids were mostly unchanged from last month at $153/ton, prices ended lower for other major suppliers. Ongoing harvests pressured Brazilian prices lower by $3/ton, settling at $159. Black Sea quotes dropped $6/ton to $170. U.S. quotes also fell slightly to $163/ton, owing to weather prospects.

Mexico Grows as Grain Importer, Supplied Primarily by the United States

Over the past decade, Mexico has expanded its role as a top grain importer, nearly doubling its combined imports of corn, wheat, and rice over this period. Mexico’s imports are now forecast to slightly exceed those of Japan, which for many years had been the top grain importer. Greater corn demand to satisfy Mexico’s growing feed sector drives this growth. Wheat imports have been stimulated by increased use of high-quality bread wheat, in comparison to durum which the country produces (and exports). Rice imports have also grown as production has not kept pace with rising consumption.

Cumulatively, the United States is the top global supplier of these three major grains and has been the dominant supplier for the Mexican market. In addition to the opportunities provided through NAFTA, the freight and logistical advantages have kept this trade relationship strong. Even as competition from South American and Black Sea exporters has reduced U.S. market share in other top grain importers, Mexico has proved a generally stable market.

Despite some recent competition in the Mexican market, the prospects continue to remain strong for the United States to be the primary supplier. From October to June, U.S. exports of corn and distiller’s dried grains with solubles (DDGS) exceeded the previous year. In the case of wheat, the U.S. share of imports rebounded from just over half in 2015/16 to nearly three-quarters in 2016/17. With rice, a strong preference for price-competitive U.S. paddy continues despite the creation of a tariff-rate quota for all types of rice.

Colombia: A Promising Market for U.S. Corn

After Mexico, Colombia is the second-largest market for U.S. corn in the Western Hemisphere. Because Colombia does not produce enough yellow corn domestically, it is heavily reliant on imports to meet growing demand from its pork and poultry industries. U.S. corn has dominated this nearly 4.5 million ton import market with almost complete market share in CY 2016. In addition, the 2012 U.S.-Colombia Trade Promotion Agreement (TPA) provides for more competitive U.S. corn prices relative to other suppliers (i.e. Argentina and Brazil), as the TPA eliminated U.S. corn from being subject to variable duties under Colombia’s Andean Community Price Band System. These duties are quite punitive when global corn prices are low. As a result, imports have surpassed the U.S. corn quota every year since 2014, suggesting robust demand and promising growth. As Colombia’s U.S. corn quota expands and duties outside the quota continue to decline under the TPA, greater growth is expected in the future.

TRADE CHANGES IN 2017/18

Selected Exporters

  • Brazilian corn is up 1.5 million tons to 35.0 million on a larger projected 2017 second crop harvest and expectations that some shipments will shift forward from the previous year. 2016/17 exports are cut 1.0 million tons to 21.0 million.
  • Ukrainian corn is boosted 1.0 million tons to 21.5 million reflecting expectations of robust EU and Iranian demand. 2016/17 exports are up 1.0 million tons to 21.5 million on recent trade data.
  • Russian corn is up 500,000 tons to 6.5 million on a larger crop and strong demand from Iran. 2016/17 exports are up 200,000 tons to 5.5 million due to recent trade data from the Federal Customs Service.
  • Serbian corn is down 300,000 tons to 2.2 million reflecting a smaller crop and expected intense competition from Ukraine.
  • South African corn is up 200,000 tons to 1.9 million on a larger new-crop 2017 harvest and strong expected demand from African countries.
  • Canadian corn is down 200,000 tons to 1.3 million on a smaller crop and expected strong competition from other global exporters. 2016/17 exports are up the same amount to 1.3 million on recent trade data.
  • EU corn exports are slashed 800,000 tons to 1.5 million reflecting a smaller crop and expected competition from Ukraine, Russia, and South America.
  • Ukrainian barley is boosted 800,000 tons to 4.4 million on larger production and expectations of competitive prices relative to other major suppliers.
  • EU barley is down 500,000 tons to 6.5 million on lower production and projected substantial competition from Ukraine and Russia.
  • Australian barley is cut 200,000 tons to 5.8 million on smaller exportable supplies. Tighter supplies were a result of higher 2016/17 exports, which are up 300,000 tons to 9.3 million on strong Chinese demand.
  • Russian barley is up 200,000 tons to 3.8 million on larger production.
  • U.S. sorghum is up 250,000 tons to 5.5 million on larger production and expectations of robust Chinese demand.

Selected Importers

  • EU corn is boosted 1.0 million tons to a world-leading 16.0 million reflecting a smaller crop and expectations of robust demand for corn from Ukraine and South America. 2016/17 imports are also up 300,000 tons to 13.4 million on recent trade data and affordable global supplies.
  • Iranian corn is boosted 1.0 million tons to 10.0 million on expectations for continued growth in the domestic feed industry and large global supplies. 2016/17 imports are boosted 500,000 tons to 9.0 million on strong shipments from Ukraine and Brazil.
  • Zimbabwe corn is slashed 800,000 tons to 100,000 on expectations for a larger crop in tandem with a current import ban.
  • Indian barley tripled to 300,000 tons on expectations of strong demand for imported feed barley from South America.
  • Chinese sorghum is up 250,000 tons to 4.5 million on expectations of greater feed use.

TRADE CHANGES IN 2016/17

Selected Exporters

  • Paraguayan corn is down 200,000 tons to 1.9 million on recent trade data.

Selected Importers

  • Chinese barley is boosted 300,000 tons to 6.5 million on continued strong purchases of Australian barley.
  • Moroccan corn is trimmed 300,000 tons to 2.0 million on lower-than-expected imports for the first half of 2017.
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