OVERVIEW

For 2017/18, global corn production is down with a significant cut in Serbia as well as lower forecasts for Ukraine, the European Union, and Russia. This more than offsets better prospects in Argentina and Mexico. Global trade is raised slightly on higher projected exports from Brazil and Argentina that more than offset a dramatic decline in Serbia. The U.S. season-average farm price is unchanged at $3.20 per bushel.

For 2016/17, global corn production is mostly unchanged from last month with higher estimates for South Africa and India. Global trade is down slightly due to lower exports for Brazil and Argentina more than offsetting higher U.S. shipments. The U.S. season-average farm price is unchanged at $3.35 per bushel.

PRICES

Global corn prices declined since last month’s WASDE because of higher-than-anticipated U.S. yield projection last month and abundant global supplies. Although Argentine bids fell $2/ton to $151, price declines were more notable for other major suppliers. Ongoing harvest pressure lowered Brazilian prices $4/ton, settling at $155. Black Sea quotes dropped $6/ton to $164. U.S. quotes plummeted $8/ton to $155 on larger crop prospects and declining competitor prices.

South America Corn Exports Soar

Brazil and Argentina have doubled their share of global corn exports over the past decade and are expected to garner nearly half in 2017/18. Both countries are forecast to have record exports while U.S. exports and market share are expected to decline in 2017/18.

Brazil and Argentina have harvested record crops in 2016/17 (harvest in early-to-mid 2017) and are forecast to have large crops in 2017/18. Expanded planted area and higher yields have led to a substantial rise in exportable supplies. Brazil’s climate allows for an additional corn crop each year with the second season (safrinha) providing for the majority of exports. The safrinha crop has fueled export growth nearly fivefold since 2007/08. Argentina’s declining currency and favorable government policies, such as the elimination of its corn export tax, have supported stronger exports.

Brazil and Argentina’s rise to prominence has altered U.S. marketing behavior and dampened U.S. competitiveness. For example, U.S. merchants often delay sales when South American supplies hit the market at the start of the U.S. harvest. Producers have incentives and the infrastructure to store corn and manage risk in order to seek higher prices later in the marketing year. Competition between these South American countries and the United States is expected to be fierce in key import markets such as East Asia and Egypt. Nonetheless, all three major exporters are expected to support record global corn trade, boosted by low corn prices, and satisfy the world’s projected record corn consumption.

TRADE CHANGES IN 2017/18

Selected Exporters

  • Serbia corn is slashed 1.5 million tons to 700,000 reflecting a drought-reduced crop.
  • Brazil corn is boosted 1.0 million tons to a record 36.0 million on expectations of strong global demand and shipments carried forward. Exports for 2016/17 are cut 500,000 tons to 20.5 million.
  • Argentina corn is up 500,000 tons to 28.0 million on projections for a larger crop and shipments being shifted forward. Exports for 2016/17 are cut 500,000 tons to 26.0 million.
  • Ukraine corn is up 500,000 tons to 22.0 million, reflecting expectations of robust EU import demand.
  • Russia corn is down 500,000 tons to 6.0 million on a smaller crop.
  • Russia barley is boosted 700,000 tons to 4.5 million on larger production.
  • Canada barley is up 300,000 tons to 1.3 million on a larger expected crop.
  • EU barley is down 300,000 tons to 6.2 million on lower production and increased competition from Ukraine and Russia.
  • Ukraine barley is up 200,000 tons to 4.6 million on larger exportable supplies.

Selected Importers

  • Libya barley is boosted 600,000 tons to 1.3 million on expectations for sustained demand from last year.

TRADE CHANGES IN 2016/17

Selected Exporters

  • U.S. corn is up 500,000 tons to 55.5 million on robust August exports.
  • Canada corn is raised 200,000 tons to 1.5 million on strong demand from the United States and the EU.
  • U.S. sorghum is up 300,000 tons to 6.1 million on stronger demand from China.

Selected Importers

  • EU corn is boosted 600,000 tons to 14.0 million on robust trade.
  • Iran corn is down 500,000 tons to 8.5 million on slower-than-expected shipments.
  • Mexico corn is lowered 300,000 tons to 14.5 million on recent trade data.
  • Saudi Arabia corn is down 200,000 tons to 3.5 million on slower-than-expected shipments.
  • Saudi Arabia barley is slashed 1.0 million tons to 10.0 million on data from published SAGO tenders and exporter shipments.
  • China barley is boosted 500,000 tons to 7.0 million on continued strong purchases of both feed and malting barley.
  • Libya barley is up 400,000 tons to 1.4 million on recent exporter data.
  • China sorghum is raised 300,000 tons to 5.0 million on expectations of greater feed use based on trade data to date.