OVERVIEW FOR 2018/19

Global corn production is up this month, driven primarily by larger crops for Argentina, Brazil, the European Union, Indonesia, Mexico, and Ukraine. Global trade is up on higher imports by the European Union. Exports are larger for Argentina, Brazil, and Ukraine, while lower for the United States, reflecting slower sales and shipments. The U.S. season-average farm price is unchanged at $3.55 per bushel.

CORN PRICES 

Global: South American bids were down, reflecting abundant exportable supplies. Argentine bids fell $3/ton to $159, while Brazilian bids, reflecting improved prospects for second-crop corn, were down $25/ton to $165. Black Sea bids rose $2/ton to $174 on stronger demand from the European Union. U.S. bids fell only $3/ton to $170 as larger-than-expected planting intentions were mostly offset by concerns over planting delays and weather-related river logistics complications.

U.S. Corn Exports Face Stiffer Competition

Combined, these four countries (Argentina, Brazil, Ukraine, and the United States) account for nearly 90 percent of global corn exports. While their dominance in global exports continues, prospects for Argentina, Brazil, and Ukraine have changed in just over a few months, primarily driven by record levels of supplies and ultimately, prices.

This month, corn crops in both Argentina and Ukraine are forecast to reach new records, supported by larger area and improved yields, leading to greater exportable supplies. Consequently, record availabilities have dampened export prices for both countries since February. For Brazil, corn production is forecast to be larger, supported by improved yield prospects for the second crop (safrinha), that has been planted earlier than usual. Typically, the second-crop corn is disproportionately destined for exports.

Meanwhile, export prices for U.S. corn remain somewhat elevated by concerns over planting delays caused by flooding in the mid-western Corn Belt, despite higher indicated area in the Prospective Plantings report. With abundant corn in the world market, sales and shipments of U.S. corn have been slower than expected in recent months. Outstanding sales as of the end of March totaled about 13 million tons, smaller than the past several years, indicating slower foreign demand for U.S. corn perhaps for the remainder of the year.

Potential Impact of CPTPP Implementation on Japan Feedstuffs Imports

Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) implementation and corresponding tariff cuts seem unlikely to cause Japan to change its suppliers of corn, sorghum, and distiller’s dried grains with solubles (DDGS) for feed purposes in the short-term because imports of these commodities are already duty-free. Though Japan currently imports a substantial amount of feed corn, sorghum, and DDGS from the United States, it is possible that Japanese preferences for grains will shift over time as a result of closer ties to other CPTPP nations, particularly Australia and Canada.

U.S. corn and sorghum face competition from Brazil and Argentina, respectively, but neither are CPTPP signatories. The United States is the world’s largest DDGS producer and exporter and dominates Japan’s imports; Canada’s comparatively smaller production makes it unlikely to meet significant Japanese demand.

U.S. food barley currently represents about 10 percent of Japan food barley imports. According to Japan’s official trade data, the average landed value of U.S. food barley is up to 60 percent higher than for Australian and Canadian barley, which could represent a quality preference and a willingness to pay a premium. CPTPP creates an incrementally growing quota and gradually decreases the government markup for CPTPP-sourced barley, which could pose a threat to U.S. food barley exports to this niche market.