US Corn Exports Suffer as Global Competition Heats Up

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Corn exports from the United States have been dragging in 2019. Heightened competition in the export market and cuts to domestic demand, due to new regulatory exemptions for US ethanol gasoline blends, have set back U.S. corn at the start of the new marketing year. The USDA has reduced its export forecast for US corn in most every month since February, dropping to 53.3 million tonnes as of the August USDA report. That’s down 14% from the department’s initial estimate. Going into the 2020 marketing year, which began last week, outstanding sales are the lowest since 2003.

Among the leading corn exporting countries, the US has lost ground. The tree map on the left shows export volumes of various countries in 2018, while the chart on the right shows the same countries for 2019. Brazil, Ukraine, and Argentina ramped up corn exports in the latest year, taking market share from the US. 

For global competitors, business is booming. Brazil has ramped up corn exports considerably, reaching 7.64 million tonnes shipped in July. This figure is Brazil’s largest single month movement on record—it’s roughly 29% greater than the previous record from September 2017. Other countries are flushing the market with corn as well. Ukraine is set to produce a record crop, and Brazil and Argentina began harvesting their second corn crops in early July. Combined exports from Ukraine, Argentina, and Brazil are expected to reach 99.5 million tonnes, a 20% increase over the previous record set by these three countries in 2016. Because yellow corn is a fungible commodity, Ukraine, Argentina, and Brazil are able to undercut US shipments to various key markets due to combinations of geographic freight advantages and currency advantages as a result of the strengthening US dollar.

One advantage the US has is in shipments to Mexico, because of the countries’ close proximity. But to many other destinations, US exports are lagging.

Japan, South Korea, Vietnam, and Egypt are routinely among the primary destinations for the world’s corn exports. Those countries are followed by the EU, which has reduced its corn imports as its wheat crop recovered this year after last year's drought. The remaining business from other destination countries is going to Ukraine, Brazil, and Argentina, rather than the US. Of longer term concern for US growers is whether this year’s cut in corn export market share continues into the future.

The charts above show monthly corn exports for the US (left chart) and Brazil (right chart). The latest year is shown in both charts as a dark blue line with markers, and is compared with previous years. In the US, corn exports have been on the decline since April. By contrast, Brazilian exports since May have soared to record volumes. 

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