by Joana Colussi, Gary Schnitkey, and Nick Paulson, Department of Agricultural and Consumer Economics,
University of Illinois
The United States Department of Agriculture (USDA) forecast that Brazil will export more corn than the United States this year has shaken the global corn market. Brazil exported more corn than the U.S. only once before, in the drought year of 2012/13. If Brazil emerges as the largest exporting nation, its front-runner status might not be temporary.
The continued expansion of corn as a second crop and the recent opening to the Chinese market could mean that Brazil will keep competing with the U.S. for the title of world’s top corn exporter more often in the coming years. This article examines the main factors that could push Brazil into first place.
China: A New Key Buyer
In its March “World Agricultural Supply and Demand Estimates (WASDE)” report, the USDA raised its forecast for Brazilian corn exports to 50 million tons for the 2022-23 marketing year (October-September). That would put Brazil above the United States, the long-established world leader in corn exports.
The United States is expected to ship 47 million tons to foreign buyers, two million tons less than the February forecast. Brazilian exports have risen sevenfold in 15 years, jumping from 7 million tons to 50 million tons (Figure 1).
Brazil and China signed an agreement on phytosanitary requirements for corn trade last year, and the first shipment of Brazilian corn to China occurred in November 2022. In the 2021-22 marketing year, the primary destinations of Brazilian corn were Iran, Spain, Japan, Egypt, and Colombia.
In January 2023, China became the primary destination of Brazilian corn exports by volume, surpassing the traditional importers, according to trade data from the Brazilian government. The pace of corn exports to China at the beginning of the year exceeded expectations. In January and February 2023, the Brazilian government authorized 90 new companies to export corn to China, reaching 446 companies qualified to ship to the Chinese market. Brazil’s exports are expected to fall seasonally beginning in March and continuing until the safrinha harvest later in the year.
By contrast, U.S. corn exports have been off to a slow start. Production in 2022/23 was smaller than initially forecast and Mississippi River conditions in the months after harvest kept U.S. prices relatively uncompetitive. Since mid-January, U.S. price competitiveness has improved but export sales have been slow to respond.
According to data from the USDA, the export inspections for January and February combined are about half of the average shipped during the same period in the last two years. Consequently, the U.S. export forecast was reduced by another 2 million tons in March relative to the previous month.
Ukraine, another large player in the global corn trade, has been able to export corn despite the war with Russia, but monthly volumes remain below pre-war levels. Overall, corn exports from Ukraine in the 2021/22 marketing year were down 20% from projections made before the war. For 2022/23, large declines in exports of about one-half to two-thirds were anticipated, but those initial concerns about lost or stranded Ukrainian agricultural commodities have not materialized (see farmdoc daily, February 24, 2023).
Meanwhile, Argentina is facing significant production cuts for the 2022/23 year because of another severe drought. As a result, according to the USDA forecast, Argentina’s corn exports are forecast at 29 million tons for the 2022-23 marketing year, the lowest since 2017/18.
This year’s Argentinian production has been heavily impacted by drought. According to the Rosario Board of Trade, Argentina is projected to produce less than 1.4 billion bushels, a decrease of about 30% compared to the last year. But the forecasts could be revised further downwards in the coming weeks. Argentina has been facing the effects of La Nina for three years in a row.
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