U.S. comes closer to losing corn export crown to Brazil

U.S. corn exports usually begin increasing in January as soybean shipments ease, but that upward trend has yet to emerge, largely due to poor overseas sales.

China is the missing ingredient for U.S. exporters, as robust bookings from the Asian country had inflated U.S. corn exports in the prior two years despite high prices, which are often demand-limiting.

Early this month, U.S. corn sales to China for the current season were nearly 70% lighter than at the same point in the previous two years, and hopes that similar purchases will eventually show up have begun waning.

But Chinese demand is not dead according to data from Brazil, which shipped more than 1 million tonnes of corn to China last month and is on track for a repeat performance this month.

While China’s interest in Brazilian corn may be somewhat negative for U.S. exporters, the purchases are friendly to the global corn market as they reflect China’s intent to continue importing the yellow grain, which it predominantly uses for livestock feed.

Brazil’s corn exports should wind down in the coming months, inviting the possibility that China turns to the U.S. market. But Chinese buyers have not secured any notable U.S. corn volumes since April 2022, and even that was significantly lighter than their early 2021 buying frenzy.

The United States remains the world’s leading corn exporter, but its reign is quickly slipping with the expansion of Brazil’s corn industry, and it may not be long before other countries join China in preferencing Brazilian supply.

SHRINKING SHIPMENTS

The 2022 U.S. corn crop was smaller than expected and lighter than in the two prior years, curbing export potential. But most U.S. export estimates for 2022-23, including those from the Department of Agriculture, originally incorporated much stronger buying from China than has been seen.

China’s failure to show up has certainly caused export targets to fall, though at the start of this month, total U.S. corn sales to all other destinations were at 10-year lows for the date.

Those factors likely forced USDA to make a huge 150 million-bushel reduction last week to U.S. corn exports, now at 1.925 billion bushels (48.9 million tonnes) for the 2022-23 marketing year ending Aug. 31.

More cuts may be needed if sales stay slow. Only 45% of USDA’s January export estimate was sold as of Jan. 5, the second-lowest coverage rate in the past 15 years.

U.S. corn export inspections last week were above analyst guesses for the first time in a while at a respectable 774,461 tonnes, though they were already breaking 1 million tonnes at this point in the last two years.

Relative to what has been sold, U.S. corn exports are running at an above-average pace, meaning shipments are efficient considering the low volumes sold. The same analysis for U.S. wheat shows an average export effort, and soybean shipments are lighter than usual when compared with total sales.

NEW KING INCOMING?

The United States has long been the top corn exporter, accounting for about 60% of global shipments through the first decade of this century. That faltered early last decade with a string of U.S. crop problems, which essentially invited other suppliers to the table.

But in the latest few years, increased production and export capacity in No. 2 shipper Brazil has the United States in serious jeopardy of losing its corn crown, something many believed could not happen this soon.

In the 2022-23 trade year spanning October 2022 through September 2023, USDA predicts Brazil will ship 48.5 million tonnes of corn versus 51 million for the United States. That 2.5 million-tonne U.S. advantage compares with a five-year average margin of more than 26 million tonnes.

Brazil exported nearly 8 million more tonnes of corn than the United States in 2012-13 following a devastating U.S. drought, but U.S. exports have been stronger than Brazilian ones each year since by at least 10 million tonnes.

For context, Brazil’s corn exports first topped 10 million tonnes in the 2010-11 trade year, and they broke 26 million tonnes two years later. The 2018-19 season holds Brazil’s current export record of 38.8 million tonnes.

By comparison, the U.S. record of 68.3 million tonnes was set in the 2020-21 October-September trade year.

Brazil’s 2022-23 corn crop is seen at a record 125 million tonnes, nearly a quarter larger than the recent average. A rapid increase in the heavily exported second crop, planted immediately following soybean harvest, contributes to the bigger export potential.

U.S. corn exports could recover in 2023-24 if the 2023 harvest is strong, but it might be possible for Brazil to steal the top spot anyway if recent export and crop growth is any indication.
Source: Reuters (Writing by Karen Braun Editing by Matthew Lewis)