Global corn production is projected down with a sharp reduction for the U.S. crop more than offsetting gains for Argentina and Russia. Global trade is fractionally down from last month as cuts to the United States and Zambia more than offset improved export outlooks for Argentina, Brazil, and Russia. The U.S. season-average farm price is up 50 cents to $3.80 per bushel.


Global corn production is up this month driven by larger crops in Brazil and South Africa. Global trade is down slightly as a decline in U.S. exports more than offsets gains for Argentina and Brazil. The U.S. season-average farm price is up 10 cents to $3.60 per bushel.


Global: Since the May WASDE, U.S. bids ran up $26/ton to $191 as crop prospects deteriorated with unprecedented planting delays in the Corn Belt. Smaller-than-expected export sales eased prices in recent weeks, but U.S. bids remain elevated reflecting limited barge shipments to the Gulf. Mirroring the situation in the United States, South American bids were also up although gains were limited by supply pressure. Argentine bids were up $16/ton to $174, and Brazilian bids were up $13/ton to $174 as well. Black Sea bids had a more muted response, rising $9/ton to $179.

Ethanol and DDGS Buoy the Performance of U.S. Corn

The United States will continue to face stiff competition from Argentina and Brazil in global corn trade. However, U.S. corn processing capabilities allow for production of fuel ethanol and its co-product, distillers dried grains with solubles (DDGS), on a level currently unmatched by any other country. As a result, the United States dominates trade in these two products. Though the outlook for corn itself may seem a difficult one for the United States, considering corn together with its products paints a rosier picture. There are myriad other uses for corn, including high-fructose corn syrup and animal feed, but this piece focuses its analysis on ethanol and DDGS.

U.S. corn processed into fuel ethanol and DDGS generates $4-5 billion in trade even as the European Union and China – formerly the largest markets, respectively, for these products – imposed prohibitive duties. The EU’s May 2019 repeal of anti-dumping duties against U.S. ethanol reopens a market that imported nearly $700 million worth of ethanol in 2011/12, the marketing year prior to duty imposition. The steady growth of U.S. ethanol exports in the absence of the EU market and the recovery of DDGS export growth without China indicate the robustness of global demand for these corn products and represent a substantial trade opportunity.

U.S. ethanol production represents approximately 80 percent of domestic corn consumption for food, seed and industrial (FSI) use. The yearly percentage of production that is exported can be calculated using data from the Energy Information Administration on total ethanol production and exports. By applying this percentage to NASS figures of corn used for ethanol, the approximate volume of corn used for ethanol exports can be derived. In marketing year 2017/18 (Sep – Aug), over 14 million tons of corn-equivalent ethanol were exported, nearly the same level as bulk corn exports to traditional top markets Japan and Mexico. In fact, since 2010/11, corn-equivalent ethanol exports exceed the levels sold to the third largest U.S. corn market. The contribution of corn-equivalent ethanol toward total corn exports can be seen below, exhibiting a general uptrend, excluding the drought-affected 2012/13 marketing year.

U.S. Corn Loses Export Competitiveness

U.S corn outstanding sales at the end of May were just shy of 8 million tons, the smallest since 2012/13. The pace of sales to key markets has been slow as U.S. corn prices have moved up sharply over the past months in response to heavy rains and flooding throughout the Corn Belt during the planting season. Moreover, high-water levels in the Mississippi and Illinois rivers have complicated barge shipments to export terminals in Gulf.

With greater seasonal availability of South American corn, many importing countries have shifted their purchases to Argentina and Brazil, where supplies are abundant at competitive prices. The spread between U.S. and South American corn prices widened in May. This situation is indicative of exports in the coming months.

After 4 years of a steady upward trend, U.S. exports for 2018/19 (Oct-Sep) are forecast down as the competitiveness of U.S. corn erodes. Exports for 2019/20 are also reduced this month with expectations that the substantially smaller crop will satisfy domestic needs first, particularly corn for fuel ethanol, before responding to demand overseas.

Even with U.S. exports forecast lower, global corn trade, year-over-year, is expected to grow as key competitors – Argentina, Brazil, Ukraine, and to a lesser extent Russia – expand their exportable supplies. Despite favorable exchange rates and the expectation of continued abundant supplies, global exports could face downside risk should U.S. crop prospects deteriorate further.