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OVERVIEW

There are few changes this month for 2017/18 global corn and supply use. Corn production is marginally lower this month with reductions for Russia, the Philippines, and Vietnam more than offsetting gains for the United States and Pakistan. Global corn trade is fractionally lower driven by reduced imports for Iran and exports for Brazil. The U.S. season-average farm price is up $0.05 to $3.25 per bushel.

PRICES

Global corn prices continued to trend upward from last month’s WASDE mainly amid South America weather concerns, disruptions in the Mississippi waterway, and positioning ahead of the January WASDE and grains stocks reports. Argentine bids rose $8/ton to $163 and Brazilian bids were up $4/ton to $165. Black Sea bids were raised $4/ton to $168. U.S. quotes reflected the strongest growth, up $9/ton to $165.

Russia Becomes Major Player In Global Coarse Grain Trade

Ample supplies of corn and barley have positioned Russia as a prominent exporter. Corn and barley exports for 2017/18 are expected to be the second-highest on record. Russia has gone from a small player to a top-five exporter in the last decade. Burgeoning supplies, low global prices, and competitive prices have improved prospects for Russia’s exports to supply both traditional and new markets.

Historically, the Middle East has been the primary destination for both barley and corn, particularly Saudi Arabia, Iran, and Turkey. The region’s strong demand for barley is utilized for sheep and camel feed, while corn is used in the region’s growing poultry industries. Russia’s access to the Black Sea and Caspian Sea provides for timely and lowcost transportation. Starting December 2017, the government began subsidizing grain transportation, particularly in regions adjacent to both seas to dispel any capacity constraints.

Russia’s outreach is spanning to Asia, threatening market opportunities for major exporters, including the United States. Record corn exports to East Asia and Vietnam in 2016/17 have underpinned Russia’s diverse network of destinations compared to 5 years ago. Shipments to Japan were a record, in addition to South Korea being the third-largest destination for Russian corn. Vietnam was the fourth-largest – no exports were recorded to the country in the past 20 years – supported by a free trade agreement between Russia and Vietnam that went into effect in late 2016. Rising production, competitive logistics, and low prices could further spur Russia’s influence on global coarse grain trade.

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FeedDinner 2018