Coarse Grains. World Markets and Trade. July 2018 – USDA July 13, 2018
Near-Record U.S. Corn Exports in 2017/18
Ample supplies, combined with a continued lack of competition and continued strong foreign demand, have brightened export prospects in the second-half of 2017/18 (October-September). This month, exports are forecast at 61.0 million tons, which if realized, would be the second-largest in history. The previous record was 61.8 million set in 1979/80.
Exports by key competitors, mainly Brazil, Argentina, and to a lesser extent Ukraine, have been slower than anticipated. Brazil’s slower pace is attributed to the current market dynamics which favor shipping soybeans over corn, a modest decline in secondcrop area, and below-normal rainfall in major producing regions. With strong demand overseas, soybeans get priority access to transportation and export channels. For Argentina, the impact of hot and dry weather in February 2018 on corn prices has diminished its competitiveness against U.S. corn. The recent depreciation of the peso could boost its ability to compete with U.S. corn, but the shipping pace reflected in the weekly port loadings has remained slow. With relatively higher prices for Ukraine corn, many importing countries have turned to U.S. corn.
U.S. corn exports for March through May were exceptional with larger volumes to traditional markets (Mexico, Colombia, Japan, and Korea) as well as second-tier markets (Vietnam, Spain, Egypt and other North African countries). Monthly inspection data indicates strong shipments for June. In addition, outstanding sales at the end of June were at a record with sales to many countries up year-over-year, suggesting strong shipments for the rest of the year. The strength in exports, however, is currently forecast to diminish year-over-year in 2018/19, as both importing and exporting countries adjust to trade dynamics.
OVERVIEW FOR 2018/19
Global corn production is up this month as larger crops for the United States, the European Union, and Serbia more than offset a reduction for Russia and Canada. Global imports are slightly higher with greater imports for South Korea and Saudi Arabia. Exports for the United States are raised to partially offset cuts for Brazil and Russia. The U.S. season-average farm price is lowered $0.10 per bushel to $3.80.
OVERVIEW FOR 2017/18
Global corn production is down this month primarily driven by a smaller second crop (safrinha) in Brazil. Global trade is forecast slightly higher with stronger imports for Canada and Turkey. Exports for United States are raised to a near-record in light of slower shipments from Argentina and Brazil. The U.S. season-average farm price is unchanged at $3.40 per bushel.
Global: Corn prices continue to fall since the previous WASDE. Argentine bids declined $12/ton to $162, and Brazilian bids were down $14/ton to $172, both largely driven by falling U.S. futures prices and depreciation of their respective currencies. Losses in Brazil were limited with deteriorating prospects for its second-crop corn. Black Sea bids were down $8/ton to $179 on uncompetitive prices. U.S. bids were down $17/ton to $160 reflecting sharply lower soybean prices, improved weather conditions across the Midwest, and larger- than-expected acreage and stocks estimates. Despite price declines, the United States remains the most competitive supplier.
Canada's Barley Exports Shift to China
Canada is a relatively small but growing exporter of barley. Historically shipped to the United States and Japan as an alternative livestock feed ingredient to corn or for malting purposes, exports to the United States were steady on consistent demand and logistical advantages.
Just in five years, Canada's export pattern has been shifted significantly. Once the largest destination, the United States is now seeing less of Canada's barley coming across the border. Over the last several years, border-adjacent states such as Minnesota, Wisconsin, and North Dakota have seen the largest drop in barley shipments. Canada’s exports to Japan have fallen precipitously as well.
In the place of the United States and Japan, China has emerged as the top destination. China's total imports of barley have risen dramatically over the last half-decade, as there are no import quotas or biotech related restrictions. While China’s strong appetite for feed barley will be met primarily by Australian supplies, demand for the price-competitive Canadian barley is likely to continue as well. Canada’s exports for the Oct-May period to China have already exceeded the total volume shipped in the entire 2016/17. A larger expected Canadian barley crop in 2018/19, coupled with a lower crop forecast for Australia, could see Canada’s barley exports to China reach new heights in 2018/19.