OVERVIEW FOR 2019/20

Global corn production is forecast up marginally with a larger crop in South Africa more than offsetting reductions for India, Peru, and Russia. Global trade is up marginally from last month with higher imports for Canada and Peru. Revisions for exporting countries are largely offsetting. The U.S. season-average farm price is down $0.05 to $3.80 per bushel.

CORN PRICES

Global: Since the February WASDE, major bids have drifted lower, weighted by COVID-19 uncertainty and benign weather in South America. Argentine bids are down $9/ton to $172 and Black Sea bids are down $5/ton to $178. U.S. bids are little changed overall, down just $1/ton to $177. Brazilian bids remain seasonally unavailable.

Corn Demand Drives Feed Grain Consumption Higher in the Middle East

Most countries in the Middle East depend on imported grains, primarily barley and corn, to satisfy demand for feed. The region has been the largest importer and the second-largest consumer of barley, which is often mixed with forages and used for sheep, goats, and camels. As barley prices at world levels have remained relatively strong8 in recent years, price-sensitive buyers in the region have turned to corn as a more competitively priced feed grain.

Middle East corn imports have grown sizably led by Iran, Saudi Arabia, Turkey, Israel, and Jordan. These countries account for 90 percent of regional corn imports. Corn consumption has steadily moved up over the years and is currently forecast to account for more than half of total feed grain use. Demand for corn is expected to strengthen as poultry production continues to expand in Turkey and Saudi Arabia. Ongoing efforts by Saudi Arabia to improve feed efficiency and to use more compound feed also boosts corn consumption, as corn is typically considered to have a higher energy value than competing grains.

EU Barley Exports Start Strong

With larger production, the European Union has exported more barley in the first quarter of 2019/20 than the previous trade year. France and Germany are major exporters within the EU, shipping primarily to Saudi Arabia, China, and Iran. Greater exportable supplies have pressured barley prices which, in turn, have provided an advantage to EU barley exports. In addition, strong exports are attributed to reduced competition from Australia and Russia. In the last 2 decades, the EU and Australia have been the top two barley exporters. However, Australia’s recent drought has affected production and substantially squeezed exports on sky-high prices and Russia’s exports have slowed as the country attempts to expand domestic use.

The EU has primarily raised its exports to China, becoming the top supplier. Previously, Australia held a 70-percent share of China’s barley trade. However, in November 2019, China announced it would extend the antidumping and countervailing duty investigation of Australian barley. The Chinese government’s action likely has influenced buyers to seek supplies elsewhere.

For 2019/20, EU exports are currently forecast up 8 percent to 6.6 million tons. Australia’s prices have begun to ease closer to EU prices due to recent rainfall which has alleviated some concerns over drought and has reduced feed demand for livestock. Although EU prices remain competitive, questions remain over whether it will hold its position in China or look to other markets such as the Middle East to maintain its strong exports.