Global Markets: Grains – South America Corn Exports Soar

Brazil and Argentina have doubled their share of global corn exports over the past decade and are expected to garner nearly half in 2017/18. Both countries are forecast to have record exports while U.S. exports and market share are expected to decline in 2017/18.

Brazil and Argentina have harvested record crops in 2016/17 (harvest in early-to-mid 2017) and are forecast to have large crops in 2017/18. Expanded planted area and higher yields have led to a substantial rise in exportable supplies.

Brazil’s climate allows for an additional corn crop each year with the second season (safrinha) providing for the majority of exports. The safrinha crop has fueled export growth nearly fivefold since 2007/08. Argentina’s declining currency and favorable government policies, such as the elimination of its corn export tax, have supported stronger exports.

Brazil and Argentina’s rise to prominence has altered U.S. marketing behavior and dampened U.S. competitiveness. For example, U.S. merchants often delay sales when South American supplies hit the market at the start of the U.S. harvest.

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Producers have incentives and the infrastructure to store corn and manage risk in order to seek higher prices later in the marketing year (see USDA ERS reports below in notes). Competition between these South American countries and the United States is expected to be fierce in key import markets such as East Asia and Egypt.

Nonetheless, all three major exporters are expected to support record global corn trade, boosted by low corn prices, and satisfy the world’s projected record corn consumption.

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